TaxTMI 
TaxTMI 
2010 (1) TMI 813
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....audit report filed by the assessee, it is noted that under clause 17(a) of Form 3 CD, it was mentioned that a sum of Rs.2,68,857/- has been debited as development and license expenses written off during the year which is of capital nature. The Assessing Officer asked the assessee as to why the same should not be disallowed because it was certified as capital expenditure in the tax audit report. In reply, it was submitted by the assessee that this expenditure was relating to development and license fees which has been incurred in connection with the registration of company's products with CIB and this expenditure has been written off on deferment basis over a period of three years. The Assessing Officer was not satisfied and he disallowed the same by holding that the same is definitely capital expenditure. Being aggrieved, the assesee carried the matter in appeal before Ld. CIT(A) but without success and now the assessee is in further appeal before us. 4. It is submitted by Ld AR of the assessee that these expenses were incurred in connection with registration of company's products with CIB. It is also submitted that for getting registration with CIB, the assessee has to sub....
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....the assessee, regarding allowability of Rs.1,50,000/- incurred by the assessee being payment to IIT Delhi for providing know how and technology transfer of Trichhoderma. Hence, this amount of Rs.1,50,000/- has to be considered as capital expenditure only because it was spent on acquiring technical know how. Regarding balance amount, we feel that the same should be allowed as revenue expenditure which will amount to Rs.1,19,457/- being 50% of the opening balance of Rs.,2,38,914/- and Rs.99,400/- being 1/3rd of the balance amount of Rs.2,98,200/- incurred during the present year and hence, the total amount to be allowed in the present year should be Rs.2,18,857/- against Rs.2,68,857/- claimed by the assessee. This ground of the assessee is partly allowed. We hold so because we feel that claim of the assessee on account of expenses for registration of the product cannot be held to be capital expenditure but the expenses on acquisition of technical know how of a new product has to be treated as capital expenditure. 7. Ground No.2 of the appeal reads as under:- "That the Ld. CIT(A) has erred both in law and on facts in disallowing expenses amounting to RTs.1,99,939/- inc....
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.... Regarding details of expenses of the present year which is available on page No.126 of the paper book, we find that these expenses are regarding product fess including payment to research fellow, cost of accessories, chemicals, brass-wares and other misc. expenses. In the absence of any finding that any new product was developed by incurring these expenses, we feel that the authorities below were not justified in treating these expenses as capital in nature. We, therefore, delete this addition. This ground of the assessee is allowed. 12. Ground No.3 of the appeal reads as under:- "That the Ld. CIT(A) has erred both in law and on facts in disallowing foreign traveling expenses amounting Rs.,6,32,628/- incurred on Hotel charges and conveyance etc. during the different foreign tours. Such expenses are genuine business expenditure incurred by directors of the company which are fully supported by traveling bill, voucher and bills." 13. Brief facts of the case are that It is noted by the Assessing Officer on page No.2 of the assessment order that the assessee has claimed an amount of Rs.23,85,037/- towards directors traveling expenses. The Assessing Officer asked....
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....ourt rendered in the case of State of Orissa v. Maharaja BP Singh Dev as reported in 76 ITR 690. It is also submitted that relevant details are available on pages 129-130 of the paper book. 15. Ld. DR of the revenue supported the orders of the authorities below. 16. We have heard the rival submissions and have gone through the material available on record and the judgments cited by Ld AR of the assessee, We find that as per the assessee, an amount of Rs.11,66,329/- was incurred towards boarding, lodging, conveyance and other expenses for which the assessee could not furnish relevant bills and vouchers before the Assessing Officer whereas, as per the Assessing Officer, the same was of Rs.12,65,256/- . Regarding this difference, Ld. CIT(A) has already directed the Assessing Officer to find out the correct figures and makes a disallowance on the basis of correct amount. Regarding the details of expenses, we find that as per the details submitted by the assessee on page No.129-130 of the paper book, an amount of Rs.8,41,989/- was incurred by the assessee on account of foreign exchange purchase and utilized and no details whatsoever have been furnished regarding manner a....
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....7.2003 i.e. for 22 days an amount of Rs.94,800/- was incurred on account of foreign exchange. Again on visit of Shri Vivek Singhal during 28.10.2003 to 18.11.2003 i.e. for 22 days, an amount of Rs.3,60,850/- was incurred on account of foreign exchange. These details show that per day expenses in these three visit is not comparable. Similarly, for accommodation charges also i.e. hotel expenses, the expenses are not comparable. An amount of Rs.1.49 lakhs was incurred during the visit of Shri Vivek Singhal to Europe for 15 days, an amount of Rs.1.31 lakhs was incurred on visit of Shri Saurabh Singhal to USA-Bangkok for 21 days and for the visit of Shri Vivek Singhal in October and November, 2003 for 22 days, the hotel expenses incurred was only Rs.0.43 lakhs. For accommodation expenses also, no details/bills were produced by the assessee and hence it cannot be said that expenses incurred by the directors of the assessee company are totally for business purpose and no personal expenses is included in these expenses. In the present case, this judgment of Hon'ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. (supra) is of no help to the assessee because such person....
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....imate of personal and non business expenses at 50% of expenses is excessive and we are of the considered opinion that to meet the ends of justice, the disallowance should be of 25% of such expenses for which supporting vouchers and details could not be produced by the assessee. We accordingly direct the Assessing Officer to restrict the disallowance to the extent of 25% of expenses for which the details and vouchers could not be produced by the assessee. This ground of the assessee stands partly allowed. 20. Ground No.4 of the appeals reads as under:- "That the ld. CIT(A) has erred both in law and on facts in disallowing prior period electricity expenses amounting to Rs.4,000/- paid to Sharma Friends Cooperative Group Housing Society Ltd. pertaining to the period 1.5.2002 to 30.6.2003 despite the fact that the demand for these expenses was made by the society during the year." 21. Brief facts of the case are that It is noted by the Assessing Officer in para No.8 of the assessment order that out of total expenses of Rs.1,44,709/- on account of prior period expenses, an amount of Rs.62,562/- were pertaining to electricity charges and discount expenses pertaini....