AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 914
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....ing the facts of the case. 3. The CIT(A) erred in law and on the facts and circumstance of the case in deleting the addition of Rs. 74,152/- made on account of expenses for purchase of microwave and mobile phone expenses being capital in nature without appreciating the facts of the case. 4. The CIT(A) erred in law and on the facts and circumstances of the case in deleting the addition of Rs. 50,000/- made under section 40A(3) being payment made to club in cash without appreciating the facts of the case. 5. The appellant craves leave to amend or alter all or any of the aforesaid grounds of appeal and amend, alter or add any other ground of appeal. 3. The brief facts of the case are that the assessee filed his return of income of Rs. 53,45,880/- on 31.10.2007 for the A.Y. 2007-08. During scrutiny assessment proceedings, the Assessing Officer found that the assessee had received income of $205,1201- (equivalent to Rs. 92,20,144/-) on which he had paid tax in the USA amounting to $53,212/- (Rs. 23,91,879). The assessee submitted that he carried on a business of consultancy in the USA through a limited liability partnership firm, in which he had 99% share. As the income was earne....
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....ry, Ld. Counsel of the assessee relied upon the order of the Ld. CIT(A). 8. We have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities. We find that Ld. CIT(A) has elaborately discussed the Issue No. 1 vide para no. 6, Issue No. 2 vide para no. 7, Issue No. 3 vide para no. 9 and Issue No. 4 vide para no. 10 of the impugned order which reads as under:- "6. I have carefully considered the appellant's submissions and perused the assessment order. I have also examined the income tax returns filed in the USA by the appellant and by the firm 'Thalay International' in which the appellant has 99% share. It is observed that the appellant has been carrying on the business activity through the limited liability partnership in the USA since several years, and its work consists of providing strategic advice and devising business strategy for its clients. This work, as submitted by the assessee, is carried out through its registered office in the U,SA, and the furnishing of these services for a period aggregating more than 90 days in the 12 month period, constitutes a 'permanent establishment' in the ....
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...., cannot be taxed in India, as it would amount to double taxation. The return filed by the appellant in the USA, was only to disclose his share of income from the US-based firm, as is the requirement of law. However, he has not claimed or been allowed any benefit under the DTAA in the USA, hence the assessing officer's findings in this respect are misplaced. 6.1 The appellant claims that the activities of 'Thalay International' are in the nature of 'independent persons' as per Article 15 of the DT AA. It is correct that the definition of professional services is an inclusive, not exhaustive, one, and could include the sort of consultancy and advisory services carried out by the appellant's firm. But to my mind, the activities would fall within the meaning of 'business profits' as per Article 7 of the DT AA, wherein clause 7 reads- "For the purposes of the convention, the term 'business profits' means income derived from any trade or business including income from the furnishing of services other than included services as defined in Article 12 (royalties and fees for included services)..... ". Article 7 renders liable to tax the profits ....
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....s. I have examined the details of expenditure incurred which are claimed to have been provided to the assessing officer vide submission dated 29.12.2009. The appellant has also produced details of purchases made from companies in the countries visited. Considering the purchases made of Rs. 4,27,88,689/-, the travel expenditure of Rs. 14,01,331/- does not appear excessive. Moreover, the assessing officer has not pointed out any defects in the bills/vouchers relating to travel, or found that it was in the nature of personal expenditure. It is held, therefore, that no cogent material exists for disallowance of 25% of the expenditure claimed. The It disallowance ofRs.3,50,332/- is accordingly deleted. 9. At ground no. 5, the issue is of disallowance of business promotion expenses, on items of expenditure held to be capital in nature. The appellant has produced the purchase bills concerned, and it is seen that the bill of Rs. 41,552/- dated 18.10.2006 consists of 13 items, including one microwave oven for Rs. 4,400/-, one music system, ten phones, etc. The bill of Rs. 32,600/- dated 4.11.2006 is for 4 pieces of mobile phones, and not one, as assumed by the AO. The appellant has submi....
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....e details of expenditure incurred which are claimed to have been provided to the Assessing Officer vide submission dated 29.12.2009. The assessee has also produced details of purchases made from companies in the countries visited. Considering the purchases made of Rs. 4,27,88,689/-, the travel expenditure of Rs. 14,01,331/- does not appear excessive. Moreover, the Assessing Officer has not pointed out any defects in the bills/vouchers relating to travel, or found that it was in the nature of personal expenditure. Therefore, the Ld. CIT(A) has observed that no cogent material exists for disallowance of 25% of the expenditure claimed. Therefore, the Ld. CIT(A) has rightly deleted the addition in dispute, which does not need any interference on our part, therefore, we uphold the order of the Ld. CIT(A) on the issue in dispute and accordingly, we dismiss the ground no. 2 raised by the Revenue. 8.3 With regard to ground no. 3, we find that issue of disallowance of business promotion expenses, on items of expenditure held to be capital in nature. On this issue, the assessee has produced the purchase bills concerned, and it appears that the bill of Rs. 41,552/- dated 18.10.2006 consists ....