9911796707
TMI Blog1998 (11) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts by restricting the allowances to 50 per cent of salary claimed at Rs. 12,80,930. 2. The learned CIT(A) erred in disallowing 10 per cent of the staff welfare expenses on estimate at Rs. 8,305. 3. The learned CIT(A) erred in disallowing 10 per cent of the miscellaneous expenses on estimate at Rs. 20,868." 3. The assessee-company is a French non-resident company having a permanent establishment (PE) inIndia, manufacturing gas turbine. The company Was awarded a contract by DESU on 16th Sept., 1985, for unloading, custom clearance, handling, transportation to site, erection storage, setting to work of imported equipment and engineering design, manufacture, inspection, testing at works, packing, transportation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,92,647 (ii) Mr. Khoudja 1,60,617 (iii) Mr. Deloye 1,60,617 (iv) Mr. Paschaki 80,308 -------- 5,94,189 -------- 4.1. The assessee claimed that such expenses are reasonably allocable to the permanent establishment inIndiaand are allowable as deduction as per art. III(3) of the Double Taxation Treaty betweenIndiaandFrance. A certificate was also filed before the AO confirming that these 4 persons were exclusively looking after the work of DESU Project while serving in the foreign company inFrance. The AO observed that during the course of discussions, it came to light that the assessee had also undertaken certain projects in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Indian branch represent amounts incurred which properly relate to the Indian branch operations. The head office of the foreign company issued a debit note in respect of salary of French Francs 5,94,189 on18th May, 1987. A copy of the said debit note has been placed at p. 8 of the paper book. The copy of auditors certificate and Annexure-D have also been placed at pp. 9-10 of the paper book. He strongly urged that the grounds raised by the assessee in itsCO.for deletion of the balance amount of disallowance of 50 per cent of salary paid to these 4 persons should be accepted and the ground raised by the Revenue in this regard should be rejected. 5. We have carefully considered the submissions made by the learned representatives of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he auditors have certified that they have reviewed the statement of expenses pertaining to Indian branch operation by inspecting on a test basis, supporting documentation maintained by Alsthom Export. They have further expressed, their opinion that the statement of expenses represents amount incurred, which properly relates to the Indian branch operation. This certificate was issued for justification of costs incurred inFrancewith respect to the gas turbine contract with DESU. The auditors of the Indian branch of the appellant company have mentioned in their audit report that the expenses incurred by head office pertaining to Indian operations have been included in the accounts on the basis of debit notes of head office and its statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roject atPakistan. Such finding has been given by the AO in the assessment order on the basis of discussions with the assessee's representative during the course of assessment proceedings. This finding given by the AO in the assessment order has not been specifically challenged either before the CIT(A) or before the Tribunal. In case this finding given by the AO is not correct, an affidavit ought to have been submitted on behalf of the assessee-company for challenging the findings so given by the AO. No such evidence in the form of an affidavit or letter has been submitted by the assessee before the CIT(A) or before the Tribunal stating that the abovenamed 4 persons exclusively worked for the Indian project during the period for which salar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.O. in relation to the aforesaid point have no merit. 6. The assessee has also raised their grievance against confirmation of disallowance of only 10 per cent out of his staff welfare expenses and 10 per cent out of miscellaneous expenses. 7. After considering the submissions made by the learned representatives of the parties and after going through the orders of the learned Departmental authorities, we are of the view that the order passed by the CIT(A) in relation to these grounds raised by the assessee in their C.O. is also most reasonable and justified. We do not find any justification to interfere with the view taken by the CIT(A) in relation to this ground of C.O. also. 8. In the result, the Revenue's appeal as well as the C.O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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