Tribunal decision: Partial appeal success for 2005-2006, full success for 2006-2007. Expenses remanded, disallowance ruled in favor.

The Tribunal partially allowed the appeal for the assessment year 2005-2006 for statistical purposes and fully allowed the appeal for the assessment year 2006-2007 for statistical purposes. The issues of Research & Development expenses and foreign traveling expenses were remanded to the AO for fresh consideration, while the disallowance under section 40(a)(ia) was ruled in favor of the appellant.

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Issues:
1. Disallowance of Research & Development expenses for assessment years 2005-2006 and 2006-2007.
2. Disallowance of foreign traveling expenses for assessment year 2005-2006.
3. Disallowance of expenses under section 40(a)(ia) for assessment year 2006-2007.

Issue 1: Disallowance of Research & Development expenses for assessment years 2005-2006 and 2006-2007:
- The appellant contested the disallowance of Research & Development expenses by the AO and confirmed by the CIT(A) for both assessment years.
- The ITAT, Ahmedabad Bench had previously restored a similar issue for the immediate preceding assessment year 2004-05 to the file of the AO for reconsideration.
- The Tribunal agreed with the previous order and decided to restore the issue of disallowance of Research & Development expenses for both years to the AO for a fresh decision after providing a reasonable opportunity of hearing to the assessee.

Issue 2: Disallowance of foreign traveling expenses for assessment year 2005-2006:
- The appellant challenged the disallowance of foreign traveling expenses by the AO and upheld by the CIT(A) for the assessment year 2005-2006.
- The appellant failed to establish the business purpose of the foreign travel expenses incurred, as evidenced by incomplete details provided regarding the trips.
- The Tribunal found that the assessee did not discharge the onus to prove the business purpose of the foreign travel, leading to the confirmation of the disallowance by the CIT(A).

Issue 3: Disallowance of expenses under section 40(a)(ia) for assessment year 2006-2007:
- The appellant disputed the disallowance of expenses under section 40(a)(ia) by the AO for the assessment year 2006-2007.
- The Tribunal observed that the TDS amount was deposited by the assessee before the due date of filing the return, rendering the provision of section 40(a)(ia) inapplicable to the case.
- Consequently, the Tribunal allowed the ground raised by the appellant regarding the disallowance of expenses under section 40(a)(ia) for the assessment year 2006-2007.

In conclusion, the Tribunal partially allowed the appeal for the assessment year 2005-2006 for statistical purposes and allowed the appeal for the assessment year 2006-2007 for statistical purposes. The issues of Research & Development expenses and foreign traveling expenses were remanded to the AO for fresh consideration, while the disallowance under section 40(a)(ia) was ruled in favor of the appellant.

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