The Delhi Income Tax Appellate Tribunal (ITAT), in M/S Pile Foundation Co v. ITO, allowed the expenditure incurred by the Company on account of foreign tour of director for acquisition of machinery under the provisions of Income Tax Act, 1961 treating the same as revenue in nature.
Earlier, both the assessing Officer and the first appellate authority had held that the same amount to capital expenditure.
On behalf of the assesse, it was submitted that the said expenditure has been incurred by them for business purposes, as it was been incurred in the process of foreign tour of director for acquisition of machinery, it must be treated as revenue expenditure and deduction must be allowed.
The Single Member accepted the above arguments of the assessee and found that one of the partner of the assessee firm went abroad to purchase a machine for the purposes of business and the same was subsequently purchased and put to use in the business of assessee firm as well. “In such a scenario, the foreign travelling expenses incurred by the assessee firm, since admittedly is for the purposes of business needs to be allowed as revenue expenditure,” the Tribunal said.
Read the full text of the Order below.
