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TMI Blog2018 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act but she has failed to demonstrate how this conclusion has been arrived at - It is settled law that section 194H is attracted when there is a principle and agent relationship between two parties whereas in the instant case no such relationship can be said to exist and, therefore, the provisions of section194H do not get attracted -licence fee recovered by BPCL forms part and parcel of the purchase cost of the assessee and the same does not attract deduction of tax at source - decided in favour of assessee Disallowance of traveling expenditure - assessee did not furnish copies of bills/ evidences for expenses incurred on foreign/domestic travel - Held that:- assessee did not produce any bills or vouchers in support of the travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings the AO noticed that as against the gross sales of ₹ 48,85,11,966/-, the assessee had paid license fees to BPCL amounting to ₹ 13,87,436/-. The AO was of the opinion that tax was to be deducted at source by the assessee on the payment of license fee. It was the assessee s submission before the AO that license fee forms part of purchase and the same is charged on the bills issued by the BPCL for purchase of petrol/diesel and, therefore, the same was not covered under the provisions of section 40(a)(ia). However, the AO was of the view that tax was required to be deducted at source. The AO proceeded to disallow the entire amount of ₹ 13,87,436/- paid by the assessee as license fees. Further, the AO also noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O in making the impugned disallowance and framing the impugned assessment order, as the same is not sustainable on various legal and factual grounds and more so as the same has been passed by recording incorrect facts and finding and without giving adequate opportunity of hearing to the assessee. 3. The Ld. Authorised Representative submitted that the assessee purchases diesel and petrol from BPCL and the license fee is part of the purchase price being charged by the BPCL. He drew our attention to a copy of invoice issued by BPCL and placed at page 16 of the paper book. It was submitted that this invoice dated 09.11.2009 was also filed as a specimen before the AO and the Ld. CIT (A). The Ld. Authorised Representative while referring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew our attention to the copies of the two assessment orders in for 2008-09 and 2009-10 as afore mentioned and which were forming part of the paper book. 3.1 Coming to the second issue being challenged by the assessee with respect to disallowance of travelling expenses, the Ld. Authorised Representative submitted that out of total amount of ₹ 2,96,602/-, an amount of ₹ 1,93,691/- pertained to foreign travel whereas the remaining amount of ₹ 1,02,911/- was towards domestic travelling expenses. It was submitted that foreign travel was undertaken to keep pace with the latest marketing techniques and to find new products of market. It was submitted that the assessee is one of the highest selling dealers of BPCL in the countr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t necessarily forms part of the purchases of the assessee which falls within the ambit of section 28 of the Act itself. The Ld. CIT (A) has upheld the disallowance on the ground that licence fee was covered by section 194H of the Act but she has failed to demonstrate how this conclusion has been arrived at. We are unable to agree with the findings of the lower authorities in this regard. It is settled law that section 194H is attracted when there is a principle and agent relationship between two parties whereas in the instant case no such relationship can be said to exist and, therefore, the provisions of section194H do not get attracted. Therefore, in view of the facts of the case, it is our considered opinion that licence fee recovered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the books of accounts of the assessee are audited and apart from the inference drawn by the lower authorities that the entire travelling expenses would not pertain wholly for business purposes, no other adverse inference has been drawn. Accordingly, on the facts of the case and also keeping in mind the failure of the assessee to furnish evidences before the AO in this regard, it is our considered opinion that interest of justice would be served if this disallowance is restricted to 25% of the entire travelling expenses. Accordingly, the ground no. 2 of the assessee stands partly allowed. 5.2 Ground nos. 3 and 4 are general in nature and are not being adjudicated upon. 6. In the final result, the appeal of the assessee stands pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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