Rs 6.42L business travel paid via wife’s card, man gets tax notice; what ITAT said

The Income Tax Appellate Tribunal (ITAT) in Mumbai recently ruled in favor of a Mumbai-based businessman, granting him partial relief from tax disallowance. The dispute arose when the income tax department objected to Rs 6.42 lakh of the businessman's business travel expenses, which had been paid using his wife's credit card and subsequently reimbursed to her.

The ITAT dismissed the tax department's objection, stating that there is no legal prohibition on a person using their spouse's credit card for business expenses and later reimbursing the spouse. This decision highlights that genuine business travel expenses are not disallowable simply because they were initially paid using a spouse's credit card and later reimbursed.

The tribunal, comprising Judicial Member Challa Nagendra Prasad and Accountant Member GM Doss, ruled that the businessman's Rs 6.42 lakh expense incurred for business travel in Paris, Russia, and other destinations was genuine. The expenses were supported by evidence, including travel details and bank statements, which the chartered accountant presented to the tribunal.

However, the ITAT did not finalize the ruling on the Rs 4,36,400 discrepancy between the businessman's income reported in Form 26AS and his books of account. Instead, the matter was sent back to the assessing officer for further verification. The tribunal emphasized the importance of preserving comprehensive documentation, invoices, card statements, and proof of reimbursement to substantiate the nature of the business expenses.