The Delhi High Court presided by Justice Manmohan and Justice Manmeet Pritam Singh Arora has upheld the deletion of addition without any cogent reasoning or working
The Assessing Officer during assessment proceedings disallowed the claim of travel and loan interest expenses alleging that the assessee M/s UTECH Developers Ltd., failed to explain the purpose of the journey and that it was ‘wholly and exclusively’ for business and there was no nexus between the utilization of borrowed funds and business activity of the assessee respectively. The CIT(A) and ITAT deleted the additions. Hence the revenue filed appeal before the High Court.
The lower authorities observed that the assessee had provided the details such as the name of its employees as well as justification or purpose of travel. It was further observed that both the authorities below hold that the assessing officer arbitrarily made addition on an estimated basis of 20% of the total traveling expenditure and emphasized that the assessing officer had failed to provide any cogent reasoning or working, based on which such disallowances were made.
The High Court further observed that the lower authorities clearly noticed that there was a clear connection between the money borrowed and its utilization for the purposes of the business of real estate and infrastructural development.
The division bench has held that “the impugned order calls for no interference as it suffers from no perversity. No substantial questions of law arise in this matter. Accordingly, the present appeal and application are dismissed”.
Mr. Ajit Sharma and Advocate Ms. Kavita Jha appeared on behalf of the appellant and respondent respectively.
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