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2010 (4) TMI 1063 - AT - Income TaxDisallowance u/s.40(a)(ia) - non deduction of tds on payment towards office upkeeping - reimbursement of expenses - HELD THAT:- When there is no element of income and the payment is only as a reimbursement of expenses incurred by the payee, then no disallowance can be made u/s.40(a)(ia). In the case in hand, the AO has not given a finding that the expenses were for office upkeeping as revenue receipt in the hands of Reliance Energy Ltd. and not a pure reimbursement of expenses. Respectfully following the decision of CIT vs. Seimens Aktiongesellschaft [2008 (11) TMI 74 - BOMBAY HIGH COURT], we decide this issue in favour of the assessee and against the Revenue. Disallowance of traveling expenses - assessee has failed to produce verifiable vouchers and addresses - CIT(A) has reduced the disallowance from 10% to 5% - HELD THAT:- Since the traveling expenses are petty in nature and keeping in view the nature of the business of the assessee at the sites located in remote areas, it not always possible to obtain proper vouchers for the said expenditure. Even otherwise, when the expenditure has not been found as abnormal in comparison to the total turnover and income admitted by the assessee, then it is not justified on the part of the lower authorities to disallow certain percentage of the expenses which is ad hoc in nature. As per nature of the expenses as well as the business activities of the assessee, we do not find any reason to disbelieve the explanation of the assessee. Accordingly, the addition sustained by the CIT(A) is deleted. Disallowance of business promotion expenses - assessee has failed to produce verifiable vouchers - HELD THAT:- Since we have considered and decided the issue on traveling expenses in favour of the assessee, on the same reasoning, this issue is also decided in favour of the assessee and accordingly the disallowance made on this account is deleted. Appeal of the assessee is allowed.
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