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2013 (7) TMI 256 - ITAT MUMBAITraveling expenses disallowed - deduction was claimed by the assessee relying on clause 9.6 of the agreement whereas it was disallowed by the authorities below relying on clause 9.3 of the said agreement - Held that:- As evident from the clauses of 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 the assessee as licensor and not by M/s Connell Bros. Co. (India) Pvt. Ltd. as licensee and the same, therefore were covered by clause 9.6 of the agreement which required the assessee as licensor to send from time to time its own representatives to visit the customers and promote the licensee's business with the said customers in an effort to assist the licensee with development of its business for the products. The said expenses therefore were to be borne and paid for by the assessee as per clause 9.6 of the agreement and the authorities below, were not justified in disallowing 50% of the traveling expenses of the assessee relying on clause 9.3 of the agreement which covered only expenses and risks incurred by the licensee. Traveling expenses claimed by the assessee were inclusive of foreign travel expenses which as stated specifically by the assessee in the written submissions filed before the CIT(A) were incurred for the purpose of visits of its employees to Hercules Inc.'s offices and plants situated in USA, Korea, Singapore, Thailand etc. for obtaining on site training in order to enable them in assisting M/s Connell Bros. Co. (India) Pvt. Ltd. with regard to technology and marketing of its products. CIT(A) presumed that the said expenses were incurred for the purposes of training to the employees of M/s Connell Bros. Co. (India) Pvt. Ltd. and proceeded on this wrong presumption to confirm the disallowance made by the A.O. on account of traveling expenses. Moreover vide letter dtd. 13-12-2010 filed by the assessee before the CIT(A) as additional evidence, M/s Connell Bros. Co. (India) Pvt. Ltd. had clarified that traveling expenses incurred by the assessee were covered by clause 9.6 of the agreement and not by clause 9.3. In favour of assessee.
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