The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that addition made on foreign travelling expenses of non-resident Indian directors for looking at affairs of company should not be disallowed. Therefore the bench set-aside the order of lower authority.
Assesse-Garware Finance Corporation Limited, was engaged in the business and financial under section 132 of the Income Tax Act, 1961 was carried out in the case of the assesee. Therfater the AO completed the assessment under Section 153A of the Income Tax Act. The AO disallowed the traveling expenses of the non resident Indian director of the company.
When an appeal was filed before the CIT (A), he upheld the disallowance made by the AO. Aggrieved assessee filed a second appeal before the tribunal.
Ryan Saldanha, counsel for the assesee submitted that foreign travel expenses relate to directori Nihal Garware resident Indian and who resides outside India.
According to assessee, he was required to frequently attend business affairs of the assessee company therefore expenditure and of foreign travel was justified.
Kishor Dhule, counsel for the revenue submitted that assessee failed to explain business expediency on foreign travels and AO disallowed for balance foreign traveling.
The tribunal of Aby T Varkey (Judicial Member) and Om Prakash Kant (Accountant Member) observed that “disallowance of travel expenses is not justified in view of suo-moto disallowance, quantum of travel expenses amount in proportion of business turnover and business expediency etc”.
Therefore, the bench set aside the order of the lower authority and allowed the appeal of the assesee.
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