1998 (11) TMI 150 - AT - Income Tax

Summary

Issues:
1. Allowability of expenses incurred in France on account of salary of technical staff members.
2. Disallowance of staff welfare and miscellaneous expenses.

Analysis:

Issue 1: Allowability of expenses incurred in France on account of salary of technical staff members:
The case involved a French non-resident company with a permanent establishment in India, awarded a contract by DESU. The main contention was the deductibility of expenses incurred in France for the salary of 4 technical staff members. The AO allowed only 10% deduction, questioning the exclusive allocation to the Indian project. The CIT(A) determined 50% of the total expenditure as reasonably allocable to the Indian project, based on the certificate and evidence provided. The Tribunal upheld the CIT(A)'s decision, emphasizing the need for evidence to challenge the AO's findings. The Tribunal found the CIT(A)'s apportionment of 50% as just and fair, considering all relevant facts and evidence, dismissing the Revenue's appeal and the assessee's cross-objections on this issue.

Issue 2: Disallowance of staff welfare and miscellaneous expenses:
The assessee contested the disallowance of 10% of staff welfare and miscellaneous expenses. However, the Tribunal found the CIT(A)'s decision on these grounds to be reasonable and justified, dismissing the assessee's grievance. The Tribunal concluded that there was no justification to interfere with the CIT(A)'s view on these expenses.

In conclusion, the Tribunal upheld the CIT(A)'s decision on both issues, dismissing the Revenue's appeal and the assessee's cross-objections.