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TMI Blog2022 (4) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax, Circle 2 (International Taxation), New Delhi (hereinafter referred to as the 'Ld. AO) u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') for the assessment year 2003-04. 2. The facts in brief are the appellant, Wuhan Research Institute of Post & Telecommunication, China (WRI) is into the business of manufacturing and sale of telecom related equipments. The Appellant was awarded a contract for supply, installation and commissioning of telecom system for LANCO project at Rajahmundry, A.P., India by Gas Authority of India Limited. The order was on "Single Point Total Responsibility of the Seller" basis and to execute the project, WRI set up a project office in India after taking approval of the Reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed terms and conditions. The services were provided by the agent through out the term of execution of the project. 2.3.1 However, the Learned A.O. disallowed the entire expenses terming it as pre-project expenses. 2.4 The Assessee has claimed that the H.O. of the appellant claimed certain expenses amounting to Rs. 42,60,897/- incurred by it relating, to the project. The expenses were based on the audited statement of accounts sent by the H.O. to the appellant. Copy of the audited accounts as well as the details of the expenses were filed with the assessing office during the assessment proceedings of the case. 2.4.1 The Learned A.O. disallowed an amount of Rs. 8,52,179/- as 20% of the total expenses on adhoc basis assuming that such exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prejudice to the Ground at No. 2, the CIT(A] erred in confirming the disallowance made by the AO which is arbitrary, unjust and very excessive. 4. That on the facts and in the circumstances of the case, the Learned CIT(A] has erred in confirming the action of AO in not treating the training fee of Rs, 36,25,700/- which falls under the definition of technical service fee as taxable under sub-clause (B] of clause (b] of Section 115A(1] of the Act and taxing the same as business receipts of the appellant. 5. That the appellant craves liberty to add, amend, vary or modify any grounds of appeal whether before the hearing or during the course of hearing." 4. Heard the counsels for the assessee and ld. Sr. DR for the revenue and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book. However, the same has no reference of any intermediary or agency being involved in grant of the work order. 5.2 Therefore, the agreement dated 25.03.2002 was relevant piece of evidence to understand what was the nature of services and for which period of those services the commission was paid to M/s. Ultro Technologies (India) Pvt. Ltd.. During hearing the Bench has sought the agreement however, the Ld. Counsel for the assessee stated at Bar that as the agreement pertains to such of far of period of 2002, the same is not available and cannot be produced before the Bench. That being so the findings of Ld. AO or Ld. First Appellate Authority that the expenses were pre project expenditure cannot be interfered. 5.3 Rather the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the complete details of Tour, Travelling & Conveyance expenses are not available. Therefore, when it is not possible to verify if the expenditure were incurred after the establishment of project office or before the establishment of project office, then there is no justification to proportionately appropriate 20% of the expenditure to prior period expenditure. The same being merely whimsical and sustaining it the Ld. FAA has also erred therefore in regard to these grounds the order of ld. Tax Authorities below cannot be sustained and the grounds are allowed. GROUND NO. 4 7. In regard to this ground it was submitted on behalf of assessee by the Ld. Counsel that the ld. Tax Authorities below have erred in invoking provisions of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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