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2012 (12) TMI 624 - AT - Income TaxDisallowance of traveling and conveyance expenditure – Held that:- Even though the assessee has explained before the CIT(A) that the expenses are meant for the purpose of business and are properly vouched and properly spent, accounted and paid by the company, the reasons elaborating the deficiencies in the vouchers and bills produced by the assessee, pointed out by the AO in the impugned assessment orders cannot be totally ignored - the disallowance worked out applying a straight rate 25% is excessive and unreasonable, thus a token disallowance of Rs.1.5 lakhs as against disallowance of Rs.12,28,516 made by the AO for AY 2004-05 and Rs.50,000 as against Rs.3,85,150 for AY 2005-06, would meet the ends of justice. Revenue’s grounds partly allowed. Professional services rendered outside India - Non deduction of TDS - Held that:- It is not the case of the Revenue that the payments were made form any office situated in India & also not on record that the foreign agents have any permanent establishment in India in that situation, the payments made by the branch office or the assessee situated outside India to agents outside the country may not fall within the provisions of sec.195(1) - against revenue. Subsidy receipt - revenue v/s capital - Held that:- Going through the STPI Scheme the issue whether the subsidy received by the assessee in the form of duty waiver on the import of capital goods, casting export obligations on the assessee, has to be re-examined in the light of the STPI Scheme as a whole, a copy of which is now filed before us. AO needs to conduct purpose test of the said subsidy on the one hand, in the light of the cited judgments, and the details of actual capital asset, in respect of which the assessee enjoyed the waiver of the duty on the other, before arriving at proper and legally sustainable decision in the matter. AO should also examine the applicability of the provisions of S.43(1) with its relevant Explanations before reaching any conclusions on the issue by passing a speaking order - thus restore the matter to the file AO for fresh consideration - in favour of assessee by way of remand.
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