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TMI Blog2014 (6) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... ice charges of Rs.16,10,74,199/- incurred for the services rendered by its holding company Sonata Software Ltd. (SSL). 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing deputation charges of Rs.10,02,95,870/- in respect of personal deputed by Sonata Software Ltd. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing reimbursement of various expenses to Sonata Software Ltd. in respect deputation and other expenses reimburse to Sonata Software Ltd. of an amount of Rs.34,00,980/-. 4. The appellant therefore, prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Officer restored." 2. At the outset, ld. coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's accounts in the consolidated annual report for assessment year 2007-08. The learned CIT (A) identified some of the expenditure on electricity, rent advertisements etc., so as to state that most of the expenditure was allocated to increase the profits in the case of SSL which was claiming deduction under section 10A. In our view the examination by the CIT (A) on few items is selective and not appropriate according to the facts. Assessee has given detailed statement of various expenditures and how these are allocated. As seen from the schedule 13 of accounts of Sonata Software Ltd., the total expenditure incurred by the SSL was Rs.165,37,53,627/- under the operating and other expenditure. Out of this an amount of Rs.14,98,56,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting in the operating expenditure). The Revenue contention that expenditure was passed on to assessee company is also not a valid argument as the recovery amount is also shown as income in the other company and this exercise is going on from 2001 onwards. It is also one of the arguments of the Revenue that even the training expenses being passed on inspite its existence for so many years. Extent of expenditure in the main company and the service charges provided being only 1/3rd of the operative expenditure of the assessee company and the training expenses claimed is still less than the above, we do not see any reason to doubt the allocation of training expenses. The requirement of training is an on-going exercise in the changed scenario o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Agreement between the Assessee and SSL by which SSL agreed to render some common services in the areas of Finance, Accounts, Taxation, Legal, Administration, HRD, education, Training, Research etc. Clause-3 of the said agreement which have been referred to in the earlier part of this order clearly shows that the expenses covered by that agreement cannot and do not relate to expenditure incurred on deputing employees to work on specific projects of the Assessee. Therefore the expenses on account of deputation charges as well as other expenses are not covered under the aforesaid agreement. The other reasons given by the AO for making the impugned disallowance cannot also be sustained. The order of the Tribunal referred while deciding Gr.N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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