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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 ..... company has not provided any services - assessee is a 100% subsidiary of the principle company SSL and there is exchange of personnel depending on the field of operation and the agreement clearly provided for distribution of service charges on the basis of turnover - The requirement of training is an on-going exercise in the changed scenario of technological up-gradation in the software industry – thus, there is no reason to interfere in the order of the CIT(A) – Decided against Revenue. Allowability of deputation charges - Personal deputed by Sonata Software Ltd. – Reimbursement of various expenses - Held that:- Following Sonata Information Technology Ltd. Versus Deputy Commissioner of Income-tax [2012 (9) TMI 335 - ITAT MUMBAI] - SSL a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are 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. counsel for the assessee submitted that all the grounds raised by the department stands covered by the decision of the Tribunal in assessee s own case for the assessment year 2008-09 in ITA No.1507/M/2012, order dated 07.09.12. The ld. D.R. also admitted that the ground raised by the department is covered by the decision of the Tribunal and even the ld. CIT(A) has followed the Tribunal s earlier year order. 3. After considering the relevant finding of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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.14,98,56,338/- i.e. less than 10% was allocated and recovered from a subsidiary i.e. assessee company SSIL. Considering the extent of expenditure in both the cases and the fact that in both the companies are reporting the above amount as service charges recovered/ paid from/to each other, we do not see any reason to doubt that assessee has not incurred the expenditure and the other company has not provided any services. Further there is levy of service tax al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges 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 of technological up-gradation in the software industry. AO cannot dictate terms to assessee how to run the business. He can only examine the genuineness of expenditure for the purpose of business. He can only examine whether the expenditure is laid out wholly and exclusively for the purpose of business. This elaborate discussion was made because the learned CIT (A) differed from his predecessors' orders allowing the said expenditure, which was up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects 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.No. 1 will equally apply to Gr.No.2 and 3 also as the other reasons given for making the impugned disallowance are similar to the one given while making the disallowance of expenses which is subject matter of Gr.No. 1. We are therefore of the view that there is merit in Gr.No.2 and 3 raised by assessee. Consequently Gr.No.2 and 3 are allowed. 6. Thus, respectfully following the same, we uphold the order of the ld. CIT(A) and accordingly gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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