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TMI Blog2012 (12) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Facts of the case in brief are that the assessing officer on verification of bills and vouchers for expenditure under the head 'travelling and conveyance, observed that majority of the bills are in the names of the individuals. Since, such expenditure which is not properly billed in the hands of the company cannot be allowed as per the provisions of S.37(1) of the Act, assessee was asked furnish its objection if any, against the disallowance proposed in that behalf. Assessee in response submitted that the bills that are submitted are issued by the travel agents for the purchase of tickets taken in the names of the employees who are travelling on behalf of the company, and the evidence in support of this expenditure being incurred on behalf of the assessee company is the claims of the employees submitted subsequently to the company. Not satisfied with the explanation of the assessee, the assessing officer disallowed 25% of the expenditure claimed by the assessee, which worked out to Rs.12,28,516 for the assessment year 2004-05 and Rs.3,85,150 for the assessment year 2005-06. 4. On appeal, the CIT(A) observing that the expenditure incurred on travelling is properly vouched and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2005-06. Consequently, Revenue's grounds on this issue are partly allowed. 9. The next common issue involved in the appeals of the Revenue relates to disallowance out of expenses made by the assessing officer, on the ground of the same being in the nature of payments made towards professional services rendered outside India, from which no Tax was deducted. Grounds raised on by the Revenue on this issue in the appeal for assessment year 2004-05 reads as follows- "3. Ld. CIT(A) erred in allowing expenses of Rs.29,43,130, which are in the nature of payments made towards professional services rendered outside India from which no tax was deducted at source. 4. Ld. CIT(A) ought to have applied the provisions of section 5(2)(a) as to the sales promotion payments are deemed to have been made in India. 5. The Ld. CIT(A) ought to have appreciated the fact that the assessee remitted the sales promotion expenses through DDS purchased from the Indian Banks or made provision for such expenses in the books of account maintained in India. Hence, by virtue of provisions of section 5(2)(a) such payments are liable to tax in India and the assessee is under statutory obligation to deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance made by the AO was not justified. The CIT(A) has rightly deleted the addition. ......." We are in agreement with the above reasoning given by the coordinate bench of the Tribunal for the assessment year 2003-04. In principle, so long as the receipts/expenditure of the Branch Offices abroad are clubbed in the accounts of the assessee's Head Office, the payments made to the Branch Offices merely constitute payment by one hand to the other of the same person. Hence, facts and circumstances of the case for the years under appeal being identical with those considered by the Tribunal for the assessment year 2003-04, respectfully following the above decision of the Tribunal, we uphold the order of the CIT(A) for the years under appeal, and consequently, grounds of the Revenue on this issue are dismissed. 13. In the result, both the appeals of the Revenue are dismissed. Assessee's Appeal : ITA Nos. 704/Hyd/2010 14. In this appeal of the assessee for the assessment year 2004- 05, the only eff4ective grounds raised are as under- "1.1 The orders passed by the assessing officer u/s. 143(3) of the I.T. Act and upheld by the learned CIT(A) in so far as treatment of subsidy as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from 28.4.2002, the assessing officer observed that the process is on going and since the assessee is meeting the export obligation, the renewal of customs duty benefit given is further extended. He further noted that the assessee vide his letter dated 22.12.2006 has attached the list of capital goods that were imported from the financial year 1999-2000 till 2003-04. The total of the customs duty waived on these goods imported from 1999-200 is Rs.45,55,109. The goods imported for the years 1999-2000, 2000-01 and 2001-02 falls under the ambit of the initial agreement entered in 1997 wherein all the export obligations till April 2002 were fulfilled. A certificate to this extent was given by the assessee vide its letter dated 26.12.2006. For the subsequent year, i.e. 2002-03, since the agreement is valid upto April 2007, the assessee has stated that the export obligation was not fulfilled as on date. But for those years, in which the export obligation is fulfilled the duty benefit received cannot be treated as contingent liability. The assessing officer noted that this fact is further corroborated by the export earnings and other documents submitted by the assessee to the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted in the alternative that if at all the subsidy has to be taxed, the amount to be taxed should be restricted only to RS.1,08,588 out of the total amount of Rs.45,55,109, which is the total amount of subsidy added, as this is the amount relatable to the import of capital goods namely HP Computer server, etc. 20. The Learned Departmental Representative on the other hand, strongly supported the impugned orders of the lower authorities, 21. We heard the by parties and perused the orders of the lower authorities and other material available on record. We have also gone through the STPI Scheme, copy of which is filed in the paper-book before us. In our considered view, the issue whether the subsidy received by the assessee in the form of duty waiver on the import of capital goods, casting export obligations on the assessee, has to be re-examined in the light of the STPI Scheme as a whole, a copy of which is now filed before us. The assessing officer needs to conduct purpose test of the said subsidy on the one hand, in the light of the cited judgments, and the details of actual capital asset, in respect of which the assessee enjoyed the waiver of the duty on the other, before a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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