The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that foreign traveling expenses of the company employees spouses accompanied on an official tour should not be disallowed. Therefore the bench granted relief to Hindustan Unilever.
Assessee-Hindustan Unilever Ltd. is engaged in the manufacturing, trading and marketing (including export) of Fast Moving Consumer Goods (FMCG) etc.
Assessee filed return of income declaring total income of Rs.6,73,16,39,240/- on 30.11.2000.
Thereafter assessee’s case was selected for scrutiny. Then, Assessment order under Section 143(3) of the Income Tax Act was passed on 03.03.2003. The total income was assessed at Rs.81,15,35,13,191/- after making various disallowances.
After that the assessee found that AO had disallowed the foreign travelling expenditures of company employee’s spouses who accompanied the official tour.
During the course of assessment the A.O noticed that the assessee has debited an amount of Rs. 40,04,260/- on account of foreign travelling expenses in respect of spouses who accompanied on official tour with some of the company employees.
The Assessing Officer had disallowed such foreign travelling expenses on the basis of similar disallowance made in assessment year 1999-2000 on the reason that expenditure of foreign travelling of the spouses was wholly and exclusively not for the purpose of business.
Aggrieved by the order, assesee filed an appeal before the CIT(A), who dismissed the ground of appeal of the assessee. Thus the assessee filed a second appeal before the tribunal.
During the hearing before the tribunal Nishant Thakkar, counsel for the assessee submitted that the such foreign travelling expenses were already covered and allowed as deduction in assesee’s own case in the assessment year 1998-99.
Chandip Singh, counsel for the revenue, supported the decision of the lower authorities.
After concluding the hearing before the tribunal the two member bench of Vikas Awasthy, (Judicial Member) and Amarjit Singh, (Accountant Member) allowed the appeal filed by the assessee and observed that identical issue on similar fact has been adjudicated in favour of the assessee in the Assessment Years 1985-86 to 1997-98.
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