TaxTMI 
TaxTMI 
2013 (7) TMI 256
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....e assessee in the present case is a company which is engaged in the business of providing technical know-how for manufacturing of chemical products required for pulp and paper industries. The return of income for the year under consideration was filed by it on 30-10-2007 declaring total income at Rs. "nil". In the P&L account filed along with the said return, traveling expenses of Rs. 30,31,107/- were debited by the assessee. During the course of assessment proceeding, it was noticed by the A.O. that the main source of the income of the assessee during the year under consideration was royalty amounting to Rs. 1,40,03,979/- received from M/s Connell Bros. Co. (India) Pvt. Ltd. In order to justify its claim for traveling expenses, supporting ....
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....ion for traveling expenses of Rs. 30,31,107/- which was almost 22% of royalty received was not justified. He therefore disallowed the traveling expenses claimed by the assessee to the extent of Rs. 15,15,554/-, being 50% of the total expenses of Rs. 30,31,107/- claimed by the assessee. 3. The disallowance made by the A.O. on account of traveling expenses was disputed by the assessee in an appeal filed before the ld. CIT(A) and the following submission was made on behalf of the assessee before the ld. CIT(A) in support of its case on this issue:- "That as per article 9.6 of the agreement with M/s. Connell Bros Co. (I) Pvt Ltd, the appellant, for the purposes of development of its business, was to assist the licensee by sending its own ....
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.... was also filed by the assessee before the ld. CIT(A) clarifying that Article 9.3 of the agreement did not cover the traveling expenses claimed by the assessee company. 4. The ld. CIT(A) did not find merit in the submissions made on behalf of the assessee on this issue for the following reasons given in his impugned order:- "It has been stated that foreign travel expenses, debited to the travelling expenses, have been incurred for the purposes of training the employees of M/s. Cornell Bros Co. - (I) Pvt. Ltd. As mentioned supra, article 4.5 clearly stipulates that the licensee shall meet its training expenses; by sending its employees to the appellants affiliate business premises for training purposes. In the circumstances, I do not s....
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....enses. Aggrieved by the order of the ld. CIT(A) the assessee has preferred this appeal before the Tribunal. 5. At the time of hearing before us, the ld. counsel for the assessee reiterated the submissions made on behalf of the assessee before the authorities below on this issue. He also invited our attention to the relevant portion of the agreement between the assessee company and M/s Connell Bros. Co. (India) Pvt. Ltd. and submitted that clause 9.3 and clause 9.6 of the said agreement operated in different field. He also submitted that since the expenses in question incurred on traveling were covered by clause 9.6, the same were to be borne by the assessee company and not by M/s Connell Bros. Co. (India) Pvt. Ltd. He contended that neit....
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....however designated, imposed in the Territory". Clause 9.6 "In an effort to assist the Licensee with development of its business for the Products, the Licensor may from time to time send its own representatives to visit with customers and promote the Licenseee's business with these customers. The Licensee shall cooperate fully with such representatives." As is clearly evident from the aforesaid clauses of the relevant agreement, all the expenses and risks incurred by the licensee namely M/s Connell Bros. Co. (India) Pvt. Ltd. in connection with the manufacture, distribution and sale of the products were to be borne and paid for by M/s Connell Bros. Co. (India) Pvt. Ltd. The expenses in question on traveling however were incurred by ....