Commissioner of Income Tax vs Bechton Dickinson India (P) Ltd.

This appeal, filed by the revenue pertains to the year 2001-02 and is directed against the Income Tax Appellate Tribunal''s order dated 23-11-2007. Although several questions have been proposed by the revenue in the memorandum of appeal, essentially only two issues are canvassed. The first issue is whether the Tribunal was correct in law in allowing a deduction representing loss on account of foreign exchange rate fluctuation on the last date of the accounting year. This issue is no longer in debate insofar as this court is concerned and has already been decided in favour of the assessee and against the revenue in CIT v. Woodward Governor India (P) Ltd. (2007) 294 ITR 451 (Del)''.

The second issue sought to be raised is with regard to deletion of the addition of Rs. 12,15,882 made by the assessing officer by disallowing 50 per cent of the expenditure incurred by the assessee on foreign travel.

We note that in the impugned order the Tribunal has considered the assessee''s own case for the assessment year 1997-98 which was decided by the Tribunal on 28-6-2005 in ITA/381/D/2003 by allowing the claim of the assessee. Following the said decision, which has been rendered in circumstances which are identical to those arising in the present case, the Tribunal deleted the addition made by the assessing officer. It may be relevant to note that the assessing officer himself, while considering the question of allowability of foreign travel expenses, had relied upon the assessments completed in respect of the earlier years. As noted in the assessment order, disallowance to the extent of 50 per cent of the amount of Rs. 24,30,363 on account of foreign travel expenses was made in view of the history of the earlier years. The reason and logic employed by the assessing officer was that the distinction between the assessee-company and its foreign arm was blurred and that the expenses incurred by the Indian entity could not be easily distinguished from the expenses incurred from the counterpart foreign entity.

However, we note from the impugned order that this issue was considered by the Tribunal in its order dated 28-6-2005 in respect of the assessment year 1997-98 and the Tribunal had concluded that the immediate cause and result of the foreign travel was the sales and marketing undertaken by the assessee in India of the products being dealt with by it. The Tribunal noted that there was no dispute with regard to this fact. Consequently, it concluded that the entire expenditure had been expended by the assessee wholly and exclusively for the purposes of its own business. The very same reasoning, which was employed by the department in respect of the earlier years, has been employed in respect of the assessment year 2001-02. The Tribunal has relied on its decision in respect of the earlier assessment year 1997-98 and has allowed 100 per cent of the claim of the assessee towards travel expenses. It may also be noted that the revenue has accepted the decision of the Tribunal in respect of the assessment year 1997-98.

Consequently, we find no reason to interfere with these findings of the Tribunal. No substantial question of law arises for our consideration. The appeal is dismissed.