2015 (7) TMI 166

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....in the paper book filed before us. We have perused the decisions cited by both the sides. 5. ITA 3202/Del/2011: This is assessee's appeal. 5.1. The first disallowance is of payment on account of technical knowhow. The facts are brought out in a note dt. 23rd January, 2008 which is at page 3 of the assessee's paper book which is extracted for ready reference. " M/s OCL India Ltd. entered into an agreement with M/s. Glenn Ray Trapp in November, 2005 for a period of 4 years i.e. upto Novernber 2009. Mr Glenn Trapp has been engaged to have his knowledge in regard to Continuous Casting refractories. This knowledge is being provided by him purely from his memory and experience and not by way of any written manual. The most important reason for engaging him was that he had claimed to provide NIL rejection i.e. 100% recovery and there by increase in throughput. But till date there has neither been any consistent decrease in rejection rate nor increase in production using the knowledge provided by him in tits and bits. Given below is the date of the month wise production and recovery % starting from 1st April, 2005 to till date which will show that there has been no improvement in recove....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lied on the order of the First Appellate Authority as well as the order of the A.O. He took this Bench through the agreement entered by the assessee with Mr.Glenn Ray Trapp which is at pages 5 to 11 of the assessee's paper book and submitted that there is transfer of knowhow and technology between Mr.Glenn Ray Trap and the assessee. 6. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, on perusal of material on record, orders of the authorities below, case laws cited, we hold as follows. 7. The agreement for technical know-how transfer between Mr.Glenn Ray Trapp and the assessee provides for transfer of technology and technical know-how in addition to technical assistance. Clause no. 1.1 of the agreement demonstrates the same. Clause no. 4 and 5 read as follows. " Clause 4. Exclusivity : 4.1. Mr.Trapp hereby grants to OCL and exclusive right to manufacture, use and sell in India and in overseas markets the CC Refractories manufactured by application of technical know-how/technology transferred by him to OCL and technical assistance provided by him in terms of and as contemplated herein. The right so hereby granted in favour of OCL s....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....has to be made as per the Guidelines of the Ministry of Environment and the Orissa Pollution Control Board. Under these circumstances, we are of the considered opinion, that the expenditure in question is in the revenue field. While coming to such conclusion we rely on the following decisions of the Jurisdictional High Court.  (i) CIT vs. Euro India Ltd. (2014) 45 Taxmann 173 (Del.) (ii) CIT vs. Priya Village Road Shows Ltd. (2011) 332 ITR 0594 (Del.) In the result this ground of the assessee is allowed. 9. Ground no.3 is against the partial disallowance of expenditure incurred by the assessee on foreign travel. The A.O. disallowed 80% of the expenses on ad-hoc basis on the ground that the assessee has not furnished the requisite details. The Ld.CIT(A) restricted the disallowance to 20% on ad-hoc basis, on the ground that personal component in the foreign travel expenses cannot be ruled out. 9.1. Ld.Counsel for the assessee contends that all the persons who have travelled are persons who are employed in the company and who are holding senior positions. It was submitted that Mr.M.H.Dalmia was appointed on 1.1.1970, Mr.R.H.Dalmia was appointed on 19.9.1980, Mr.Gaurav Dalmia....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... disallowance of 80% made by the A.O. which is adhoc and arbitrary in our view cannot be sustained in the facts and circumstances of the case. This brings us with the issue whether the First Appellate Authority has right in making a disallowance of 20% of the total foreign travel expenses on the ground that there is a possibility of personal component in such expenditure. In our view adhoc disallowances cannot be sustained, unless there is evidence. The assessee has furnished trip wise details of its Srcutives and has also furnished the business transacted in each trip, export details, customer wise details of exports to various countries. Even copies of discussions held and copies of tour reports were furnished. In the face of such overwhelming evidences, to make an adhoc disallowance on surmises and conjectures cannot countenanced. In the result this ground of the assessee is allowed and the disallowance of 20% is deleted. 10. Ground no.4 is on disallowance made u/s 14A of the Act. In view of the smallness of the disallowance, the Ld.Counsel for the assessee did not press for the same on the condition that the finding of the A.O. as confirmed by the Ld.CIT(A) would not be consid....