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2018 (10) TMI 1265 - ITAT MUMBAIDisallowance of traveling expenses - allowable busniss expenditure U/S 37 - disallowance of 50% of travel expenses being personal or capital in nature - Held that:- The assessee did discharge its burden by placing entire material on record and no addition is warranted towards disallowance of 50% of the travelling expenses and we hereby order deletion of additions as were made by the AO and confirmed by Ld. CIT(A). - Decided in favour of the assessee. Disallowance of salary expenses - AO observed that the assessee is engaged by its parent holding company in Shanghai which is the only revenue generating activity of the assessee - 20% of the salary expenses stood disallowed on the grounds of being excessive vis-a-vis turnover/income declared in return of income filed with Revenue - Held that:- The Revenue has not brought on record comparative analysis of other independent entities to bring on record cogent material to prove that the salaries paid to these employees were excessive. The only grievance of the revenue is that the said salary expenses were on the higher side vis-a-vis business generated by the assessee during the year, which in our opinion is no reason for making disallowance keeping in view factual matrix of the case and the explanation submitted by the assessee. We are of the considered view that no disallowance of 20% of the salary expenses is warranted keeping in view factual matrix of the case, which we order deletion .- Decided in favour of the assessee. Additions made u/s. 92 - assessee has purchased software for ₹ 3.2 crore from its foreign parent company based in Shanghai, China which was sold by the assessee for ₹ 3.2 crore to HCL Technologies Limited , without any mark-up for the assessee - Held that:- The contention of the assessee that it has not incurred any expenses nor it did any value addition to software supplied by the foreign parent company cannot be prima-facie accepted on its face value based on material on record and it is for the assessee to support the same with cogent evidences. The complete details to that effect are not placed by the assessee before the authorities below as well before us. Restore the matter back to file of the AO for denovo determination of the issue on merits in accordance with law. Appeal filed by the assessee is allowed for statistical purposes.
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