Madras High Court
Shri P. Amarnath Reddy vs The Assistant Commissioner Of ... on 7 April, 2021
T.C.A.No. 464 of 2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE: 07.04.2021
CORAM:
THE HON'BLE MR. JUSTICE M.DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE R.HEMALATHA
T.C.A.No. 464 of 2012
Shri P. Amarnath Reddy,
No.1/1, Kothari Road,
Nungambakkam,
Chennai - 600 034. ... Appellant
v.
The Assistant Commissioner of Income Tax,
Central Circle - III (3),
Chennai - 600 034. ... Respondent
Appeal preferred under Section 260A of the Income Tax Act, 1926,
against the order of the Income Tax Appellate Tribunal, Madras, "A"
Bench, dated 28.08.2012 in I.T.A.No.926/Mds/2012 for the Assessment
Year 2005-2006.
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T.C.A.No. 464 of 2012
For Appellant : Ms. Sri Niranjani Srinivasan
For Respondent : Mr. T.R.Senthil Kumar, Sr. Standing Counsel
and Mrs. K.G. Usha Rani, Standing Counsel
JUDGMENT
(Judgment was delivered by M. DURAISWAMY, J.)
Challenging the order passed in I.T.A.No.926/Mds/2012 in respect
of the Assessment Year 2005-2006 on the file of the Income Tax
Appellate Tribunal, Chennai,"A" Bench (for brevity, the Tribunal), the
assessee has filed the above appeal.
2.1 The assessee filed its return of income in respect of the
assessment year 2006-07 on 31.10.2005 admitting a total income of
Rs.6,33,20,125/-. The assessment was completed under section 143(3)
of the Income Tax Act on 31.12.2007. While completing the above
said assessment, the Assessing Authority, along with other additions,
disallowed the foreign travel expenses to the tune of Rs.3,36,739/-
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T.C.A.No. 464 of 2012
incurred in respect of Mrs. Swetha Reddy alleged to be an employee of
the company on the ground that she was the wife of the appellant. The
Assessing Officer also disallowed the expenses incurred by the appellant
for foreign travel to the tune of Rs.4,26,617/- as against the total amount
of Rs.21,33,088/- that was claimed. The basis of the disallowance was
that Mrs. Swetha Reddy had accompanied the assessee on most of the
trips and accordingly the Assessing Officer assumed that certain amount
of personal expenditure would be involved.
2.2 The assessee contended that all foreign visits made were for
the purpose of business marketing and the expenses were wholly
allowable under section 37 of the Income Tax Act. However, the
Assessing Officer disallowed the claims made under section 37(1) apart
from making other additions.
2.3 Challenging the order passed by the Assessing Officer, the
assessee filed an appeal before the Commissioner of Income Tax
(Appeals) and the Commissioner of Income Tax also confirmed the
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T.C.A.No. 464 of 2012
order passed by the Assessing Officer disallowing the expenses incurred
on foreign travel of the appellant as well as Mrs. Swetha Reddy .
2.4 Aggrieved over the order passed by the Commissioner of
Income Tax (Appeals), the assessee filed an appeal before the Income
Tax Appellate Tribunal, and the Tribunal also confirmed the order of the
Commissioner of Income Tax (Appeals) and dismissed the appeal.
Aggrieved over the same, the assessee has filed the above appeal.
3. The above appeal was admitted on the following substantial
questions of law:
“ (i) Whether on the facts and in the
circumstances of the case, the Income Tax
Appellate Tribunal is right in law in confirming the
disallowances made on account of expenditure
incurred and claimed on foreign travel u/s 37 of the
Income Tax Act by the employee few the firm
Mrs. Swetha Reddy?
(ii) Whether on the facts and in the
circumstances of the case, the Income Tax
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T.C.A.No. 464 of 2012
Appellate Tribunal is right in law in confirming the
order of the lower authorities to the effect that the
expenses incurred on foreign travel and claimed by
the appellant under section 37 of the Act be
restricted to 1/5th of the total amount claimed?”
4. Ms. Sri Niranjani Srinivasan, learned counsel appearing for the
appellant submitted that though the assessee had produced the details
with regard to the salaries, bonus and group gratuity in respect of
Mrs. Swetha Reddy for the financial year 2004-2005, the authorities have
not considered the same and erroneously came to the conclusion that she
was not an employee of the firm M/s.Shoetek Agencies. The learned
counsel further submitted that when the assessee had produced the
documents as to the salaries, bonus and group gratuity received by
Mrs. Swetha Reddy, the Tribunal and the Commissioner of Income
Tax(Appeals) should have accepted the case of the assessee and allowed
the appeal.
5. Countering the submissions made by the learned counsel
appearing for the appellant, Mrs. K.G. Usha Rani, learned Standing
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T.C.A.No. 464 of 2012
Counsel appearing for the respondent submitted that the assessee has not
produced any salary certificate of his wife Mrs. Swetha Reddy to
establish that she was an employee of the firm, viz., M/s.Shoetek
Agencies. Further the learned counsel submitted that the assessee has not
raised any substantial question of law with regard to
non-consideration of the alleged documents produced before the
Assessing Officer.
6. On a careful consideration of the materials available on record
and the submissions made by the learned counsel on either side, it could
be seen that the Income Tax Appellate Tribunal has categorically stated
that at the time of hearing of the appeal, the learned counsel for the
assessee filed the P.F. and ESI details relating to the Assessment Years
1994-1995 and 2004-2005 and the said details were not filed either
before the Assessing Officer or before the Commissioner of Income
Tax(Appeals). Further, the Tribunal observed that no application has
been filed before the Tribunal to admit the said documents. That apart,
the Tribunal also observed that the evidence filed before it was not
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T.C.A.No. 464 of 2012
sufficient to prove that Mrs. Swetha Reddy was an employee of
M/s.Shoetek Agencies for the reason that there was nothing on record to
establish as to when she was appointed and what was her salary etc.
When the assessee is contending that Mrs. Swetha Reddy is an employee
of M/s.Shoetek Agencies, the burden lies on the assessee to establish the
said contention. The issue whether Mrs. Swetha Reddy was an
employee of M/s.Shoetek Agencies or not is a question of fact and is a
matter for evidence and th same was decided against the assessee by the
Tribunal as well as by the Commissioner of Income Tax(Appeals) and
also by the Assessing Officer.
7. It is pertinent to note that in the Assessment Order,
M/s.Shoetek Agencies is the assessee's proprietary concern and is
engaged in the business of leather and leather products. In the
Assessment Order, though the assessee contended that Mrs. Swetha
Reddy went aboard in the capacity of Marketing Executive, he has not
produced any document to prove that her visit was exclusively for
business purpose. Further, the Assessing Officer observed that since
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T.C.A.No. 464 of 2012
Mrs. Swetha Reddy had accompanied the assessee on several occasions ,
the element of personal tour cannot be denied. When the assessee is
contending that Mrs. Swetha Reddy was an employee of the firm, he
should have produced sufficient documents to establish the said
contention. Further it is not the case of the assessee that there is
perversity in the order passed by the Income Tax Appellate Tribunal,
Commissioner of Income Tax(Appeals) and in the order of the Assessing
Officer.
8. In these circumstances, we find no ground much less any
substantial question of law to interfere with the order passed by the
Income Tax Appellate Tribunal and by the other authorities. Hence, the
Tax Case Appeal is liable to be dismissed. Accordingly, the Tax Case
Appeal is dismissed. No costs.
[M.D., J.] [R.H., J.]
07.04.2021
Index : Yes/No
Internet : Yes
Rj
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T.C.A.No. 464 of 2012
To
1. The Assistant Commissioner of Income Tax,
Central Circle - III (3),
Chennai - 600 034.
2. The Income Tax Appellate Tribunal,
Chennai,"A" Bench
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T.C.A.No. 464 of 2012
M. DURAISWAMY, J.
and
R.HEMALATHA, J.
Rj
T.C.A.No. 464 of 2012
07.04.2021
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