ITAT Reduces Disallowance of Foreign Travel Expenses to 25% Due to Partial Documentation [Read Order]
Referring to a similar decision in AY 2013-14, the tribunal held that partial evidence, including correspondence and invoices, substantiated the business nature of the travel and directed the AO to restrict the disallowance to Rs.5,55,055/-.
![ITAT Reduces Disallowance of Foreign Travel Expenses to 25% Due to Partial Documentation [Read Order]](https://images.taxscan.in/h-upload/2025/08/20/2078599-foreign-travel-expense-taxscan.webp "ITAT Reduces Disallowance of Foreign Travel Expenses to 25% Due to Partial Documentation [Read Order]")
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal of the assessee reducing the disallowance of foreign travel expenses to 25% due to partial documentation. Archi Exim P. Ltd., appellant-assessee, was engaged in the import and export of chemicals and filed its return for AY 2016-17, declaring a total income of Rs.11,06,742/-. The return...
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal of the assessee reducing the disallowance of foreign travel expenses to 25% due to partial documentation.
Archi Exim P. Ltd., appellant-assessee, was engaged in the import and export of chemicals and filed its return for AY 2016-17, declaring a total income of Rs.11,06,742/-. The return was processed under section 143(1) and later selected for scrutiny.
The Assessing Officer (AO ) noticed that the company had claimed Rs.22,20,220/- as “Travelling and Boarding Expenses” and proposed disallowing 50% (Rs.11,10,110/-), as the business purpose was not sufficiently documented. The assessee submitted bills, invoices, and an email showing interest in joining a business delegation to Iran. The AO held the evidence was general and disallowed the expenses.
Want a deeper insight into the Income Tax Bill, 2025? Click here
On appeal, the Commissioner of Income Tax(Appeals)[CIT(A)] confirmed the disallowance, stating the assessee did not provide additional proof and the burden of proof was on them. The assessee then appealed to the tribunal.
The assessee counsel stated that the disallowance related to the Director’s travel to Iran for a CII-organised Business Delegation. They argued that partial documents, including CII communication and invoices, were submitted and the expenses were entirely for business purposes.
The counsel also pointed out that in the assessee’s case for AY 2013-14, the tribunal had restricted similar foreign travel disallowance to 25% of the claim.
The Department relied on the AO’s order.
How to Audit Public Charitable Trusts under the Income Tax Act Click Here
The two member bench comprising Suchitra R. Kamble (Judicial Member) and Makarand V.Mahadeokar (Accountant Member) reviewed the submissions and records and noted that the AO had disallowed Rs.11,10,110/-, which was 50% of the total travelling and boarding expenses of Rs.22,20,220/-, claiming that the Director’s foreign travel to Iran under the CII Business Delegation was not fully supported by documentation.
The appellate tribunal referred to the assessee’s case for AY 2013-14, where under similar circumstances, the Co-ordinate Bench had restricted the disallowance of foreign travel expenses to 25% of the total claim.
In the present case, although complete evidence of actual participation was not available, partial documentation such as correspondence and invoices supported the business purpose of the travel, which was not disputed by the Department.
Considering the earlier decision and principles of judicial discipline, the tribunal directed the AO to limit the disallowance to Rs.5,55,055/- (25% of Rs.22,20,220/-) and delete the remaining Rs.5,55,055/-.
The ITAT partly allowed the assessee’s appeal.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
