Tribunal affirms CIT(A)'s decision on foreign travel expenses & deduction for Hyderabad branch

The Tribunal upheld the CIT(A)'s decision to delete the disallowance of foreign travel expenses, affirming that the expenses were related to the business of the assessee-firm. Additionally, the Tribunal supported the CIT(A)'s grant of deduction under section 80-IB to the Hyderabad branch, ruling that it qualified as an "industrial undertaking" engaged in manufacturing ornaments. The Tribunal dismissed the Revenue's appeal, confirming the CIT(A)'s orders on both issues for the assessment year 2002-03.

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Issues involved: Appeal against order of CIT(A) for assessment year 2002-03 regarding disallowance of foreign travel expenses and deduction under section 80-IB for Hyderabad branch.

Issue 1 - Disallowance of foreign travel expenses:
The Revenue appealed against the deletion of disallowance of foreign travel expenses incurred by the assessee on the grounds that there was no requirement for such travel as the assessee was not engaged in export of jewellery. The CIT(A) deleted the disallowance based on the expenses being related to the business of the assessee-firm. The Tribunal upheld the CIT(A)'s decision, stating that the expenses were incurred in connection with the business of the assessee-firm and dismissed the Revenue's appeal.

Issue 2 - Deduction under section 80-IB for Hyderabad branch:
The Revenue contested the decision of the CIT(A) to grant deduction under section 80-IB to the Hyderabad branch of the assessee. The Assessing Officer had denied the deduction, stating that the Hyderabad branch was not an "industrial undertaking" engaged in manufacturing of ornaments. The CIT(A) disagreed with the Assessing Officer, holding that the Hyderabad unit was the real manufacturer of jewellery and eligible for the deduction. The Tribunal upheld the CIT(A)'s decision, noting that the Hyderabad unit met all conditions for the deduction and that the activities were similar to a precedent case. The Tribunal also dismissed the Revenue's alternate contention regarding GP and net profit shown by the Hyderabad unit, stating it required further investigation into the facts.

In conclusion, the Tribunal confirmed the CIT(A)'s orders for both issues, dismissing the Revenue's appeal.

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