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TMI Blog2011 (5) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... any as per the provisions of Section 9(1)(vii) of the Income-tax Act, 1961; 3. Whether on the facts and in the circumstances of the case, the ld. CIT (Appeals) has erred in law and in facts by holding that the Assessee company being an independent entity different from its directors/employees expenses made for the personal benefit of the directors/employees cannot be disallowed in the case of the company; 4. Whether on the facts and in the circumstances of the case, the decision of the ld. CIT (Appeals) is bad in law enunciated in Section 37 of the Act allowing only those expenses which are incurred wholly and exclusively for the purpose of the business. 3. The first issue for consideration relates to deleting the addition on account of man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices. It was also submitted that managerial services would mean the services in the field of managing the affairs or laying down policies, procedures, evaluation of the existing system or evaluation of some new policies or strategies in place of present system. He placed reliance on the Board Circular No. 715 dated 8/08/1995 wherein Central Board of Direct Taxes clarified that payment to clearing and forwarding agents for carriage of goods is subject to deduction of tax at source under Section 194C of the Act. It was also submitted that provisions of Section 194C deal with the payments for carrying out any work including certain services. Section 194J on the other hand, stipulates deduction of tax at source in respect of professional and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent, not being a company or to a foreign company on which tax is deductible at source under Chapter XVII-B and such tax had not been deducted or after deduction has not been paid during the previous year or in the subsequent year before expiry of time prescribed under Sub-section (1) of Section 200 shall not be deducted in computing the income chargeable under the head 'profits or gains of business or profession'. The payment made to freight forwarding agent as held by the ld. CIT (Appeals) is covered by Circular No. 715 dated 8/08/1995 and, therefore, the payment cannot be treated in respect of managerial services. The expenditure is in the nature of business expenses. Moreover, the said payment is not chargeable to tax under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble Supreme Court in the case of GE India Technology Centre (P) v. CIT dated 09.09.2010. Since the payment of Rs. 3,22,042/- is not chargeable to tax in India under Section 9(1)(vii) read with Section 195 of the Act, provisions of Section 40(a)(i) will not be applicable. Accordingly, we do not find any infirmity in the order of the ld. CIT (A) deleting the addition. 6. The next issue for consideration relates to deleting the addition of Rs. 7,10,095/-, being 20 per cent of travelling expenses disallowed by the assessing officer for personal use of the vehicles by the Directors and other employees for their personal purposes. On appeal it was submitted that the amount of Rs. 35,54,574/- was the total expenditure incurred on for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the Assessee. He had deleted the addition for the same reason for which he deleted the disallowance of Rs. 7,10,915/- as the disallowance was made incorrectly. 8. We have heard both the parties. From the details filed it is seen that the Assessee has spent Rs. 25,33,751/- on local conveyance, foreign and inland travel. The Assessee has incurred another amount of Rs. 15,43,968/- on account of vehicle hire charges, repairs and maintenance, depreciation etc. The Assessee had paid Fringe Benefit Tax on these amounts. The assessing officer has disallowed 1/5 of the vehicle maintenance expenses of Rs. 10,01,773/-, which has been taken by the assessing officer in the assessment order at Rs. 20,035/- as against Rs. 2,00,350/-. Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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