Reimbursement of advertisement and promotion on a cost-to-cost...

Reimbursement of advertisement and promotion on a cost-to-cost basis was held allowable where the sister concern had already deducted tax on the underlying expenditure and no mark-up or lack of genuineness was shown; section 40(a)(ia) disallowance was deleted. Retainership fee under the joint venture arrangement was accepted as business expenditure, but for AY 2005-06 only proportionate accrual from the implementation date was allowed, with full claims upheld for later years. Reimbursement of joint venture operating expenses, business promotion expenditure, and fuel and telephone costs were also allowed, while short deduction of TDS did not attract section 40(a)(ia). Section 14A disallowance was sustained on a reasonable estimate.