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TMI Blog2012 (7) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... eting the disallowance of Rs. 2,82,172/- of expenditure on account traveling of Mr. Mukesh Sehgal without considering the fact that the expenditure. As argued by the assessee before the CIT(A), Shri Mukesh Sehgal has traveled to India in order to complete formalities to obtain permission/approval for setting up 100% EOU was granted on 03- 01-2006, 16-01-2006 & 27-01-2006. Before the date of obtaining the approval and before even taking the possession of the premises from which business of 100% EOU was to be carried out on the business of 100% EOU cannot be said to be set up. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O. to allow exemption u/s 10B on the profits derived for the period 01-02-2006 to 31-03-2006 without even discussing three reasons for disallowing the deduction mentioned by the A.O in para 13 of the Assessment Order. 5. The appellant craves to be allowed to add, delete or amend any other grounds of appeal. 2. The brief facts of the case are that assessee filed its return of income on 27-011-2006 declaring an income of Rs. 3,45,010/-. The case of the assessee was selected for scrutiny. During assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property was neither owned by assessee nor any lease deed was there. When confronted, the assessee submitted that agreement for lease was entered into on 11- 08-2007. The AO disallowed the depreciation on this amount on the basis that assessee was neither the owner of building nor having any tenancy right upto 31-03-2006. (3) Traveling expenses 6. The AO noted that a sum of Rs. 5,64,344/- has been incurred on treaveling by Ms. Radhika Sehgal and Mr. Mukesh Sehgal, who were neither employees nor directors in the said company. On being confronted, the assessee vide letter dated 19-12-2008 pleaded that the said expenses were incurred by the assessee, in connection with various formalities linked to the premises taken by the assessee company to set up its office. The AO disallowed the amount of traveling expenses on the basis that assessee had failed to furnish any documentary evidence to substantiate its claim and held that the expenses were shame and bogus and hence they were added back to the income of assessee. 7. Aggrieved the assessee filed appeal before CIT(A) and submitted the following submissions in respect of various additions :- (1) Miscellaneous receipts 8. The Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, he allowed the depreciation on the amount of Rs. 74,28,022. 13. The relevant portion of CIT(A) order is reproduced below: "Even if the lease agreement had not been made during the previous year under consideration, that alone cannot be the reason for denying depreciation due to the appellant company on the capital work done in the said premises as long as the work was required with a view to carrying out the business of the company and the business of the company was actually carried out in the said premises w.e.f January 2006, a fact which has not been disputed by the AO. The depreciation admissible at 50% of 10% of Rs. 74,28,022/- which works out to Rs. 3,71,402/- as claimed by the appellant is, therefore, allowed." (2) Traveling expenses 14. The Ld. AR argued before CIT(A) that amount of expenditure of Rs. 5,64,344/- was incurred by the appellant company on the traveling expenses of Ms. Radhika Sehgal and Mr. Mukesh Sehgal and further submitted that Ms. Radhika Sehgal is the owner of the premises in which appellant company has been running its STP units which was formally leased to the applicant company w.e.f 01-04-2007. The Ld. AR argued the traveling expenses of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as satisfied all conditions under the STPI scheme that approval granted was renewed year after year and last approval was valid till 15-01-2008. (vii)That for claiming deduction u/s 10B, it was not necessary that development/manufacture should be carried out in STP unit itself. Reliance was placed upon the judgment of Techdrive India Pvt. Ltd. reported it 25 SOT 152 wherein it was held that u/s 10B, it was not required that assessee company should own plant & machinery or equipment and manufacture or produce computer software on same. (viii)That the requirement u/s 10B is only that the units should be registered with STPI and there should be export sale and in the instant case, the appellant company had satisfied both these conditions. (ix)That CBDT circular no.-1, dated 06-01-2005, the deduction u/s 10B is to be restricted to the profit derived from the export of software and after the date of the approval of the undertaking which was on 03-01-2006 in the instant case. (x)That under e-filing of return, the hard copy of audit report cannot be filed and therefore objection of AO is not valid. The audit report in the prescribed form was filed during assessment proceedings. 16. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but it holds lease or other right of occupancy, the depreciation on any renovation or interior work can be claimed. He further submitted that property belongs to family members of one of the directors so there was oral understanding between them and therefore renovation was started before execution of the lease deed. 20. In his rejoinder, the Ld Dr submitted that no document of right to occupancy was filed before the Ld Assessing Officer. 21. We have heard the rival submissions of both the parties and have gone through the material available on record. From the facts of the case, we find that Mrs. Radhika Sehgal, the land lady and Mr. Mukesh Sehgal director of the company traveled together to India. In fact, as per argument of Ld AR that they are close relatives. Therefore, it can be said that there was oral understanding between them for lease of the above building. Moreover, the various licenses issued by various authorities like Customs Department STPI had given licenses with the same property as its address. Moreover, business was also started from the same premises before 31st March, 2006. Therefore, we do not see any reason to interfere in the order of Ld CIT(A). 22. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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