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2013 (6) TMI 570 - AT - Income TaxTelephone expenses disallowed - Held that:- As only in the impugned assessment year, the AO has made a disallowance, which has not been followed up even in the subsequent years, though, the assessments were framed u/s 143(3). Thus the rule of consistency cannot be ignored as laid down by a host of decisions in various fora. Therefore set aside the order of the CIT(A) sustaining the disallowance at Rs. 58,557/- on this issue and direct the AO to delete the disallowance made at Rs. 78,076/-. In favour of assessee. Disallowance of partners conveyance - CIT(A) restricted it to 10% - Held that:- The conveyance allowance are fixed by the company to its partners. This fact, as well as the fact that the disallowance has been made only in the impugned year has not been denied by the DR. Thus following the rule of consistency no further disallowance is called for. In favour of assessee. Disallowance of business development expenses - Held that:- As no disallowance made even in the subsequent years. Since the AR has pleaded for a reasonable and suitable reduction ad-hoc disallowance of Rs. 15,000/- would meet the ends of justice. Partly in favour of assessee. Disallowance of foreign travel expenses - Held that:- From the breakup reproduced along with the bills with regard to foreign travel, which do have a positive presumption of carrying professional/business connection, because, durations are small, which can only be presumed to be professional/business oriented. But expenses shown under "others" and "Visa fee", cannot be allowed, because, visa once given can be used by the person for any number of times, including for personal requirements and there are no details of others (Rs. 20,728/-). Therefore, set aside the order of the CIT(A) and direct the AO to restrict the disallowance to Rs. 20,728/- and allow the balance aggregating to Rs. 3,92,115/-. Partly in favour of assessee. Disallowance u/s 40(a)(i) for non deduction of TDS - assessee paid membership fee to Baker Tilly International (BTI), located in England - Held that:- No part of the payment made as subscription to BTI has resulted in income in its hands. Clause 3.5 of the agreement specifies that the company shall not constitute any partnership, joint venture or agency relationship with its members. This clears the deck to come to the conclusion that the subscription paid to BTI does not involve any income element and therefore, the provisions of TAS shall not be applicable. Thus set aside the orders of both the revenue authorities and direct the AO to delete the disallowance made to BTI. In favour of assessee. Disallowance of payment made to the legal heirs of the deceased partner - Held that:- The issue, in so far as the assessee is concerned, can be said to in favour and covered by an order of the coordinate Bench in its own case in assessment year 1981-82. Also AO has himself conceded that in the case of Mulla & Mulla [1990 (9) TMI 32 - BOMBAY High Court] has held that an overriding charge to have been created over the assessee, "where, by the obligation, income is diverted before it reaches the assessee, it is deductible". Since the payment has been made by the firm to the legal heir of its deceased partner, as per the clauses of the partnership deed dated 1.4.2000 having unequivocal covenants. Thus the amount so paid to the legal heir of the deceased partner is an allowable expense. In favour of assessee. Non deduction of TDS on payments made to professionals - Held that:- As payments had been made to non professional who are contracted for 3-4 months to do and learn the basic concepts of profession of accountancy. The persons are students who are perusing their accountancy degree/diploma or even as interns. It is economical for the employees to engage such persons, who would come, do the basic work of a paid employee, prepare some details/reports and go in 3-4 months time. Thus assessee has made payments to such students or small time accountants, who take up office job work at certain period of times & shall not attract deduction of tax at source and hence would not be hit by section 40(a)(ia). In favour of assessee.
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