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2014 (6) TMI 508 - AT - Income TaxDisallowance u/s 40(a)(ia) of the Act – Business promotion expenses – TDS provision – Held that:- CIT(A) has granted the relief to the assessee by considering the correct facts pointed out by the assessee in respect of the rebates allowed to the customers which was shown under the head business promotion expenses - the correct amount of TDS deducted by the assessee as per the e-TDS return - the assessee raised a fresh plea before the CIT(A) that the expenses debited to the P&L account under the head business promotion expenses also includes a sum towards the bad debts – the amount cannot be disallowed by applying the provisions of section 40(a)(ia) - CIT(A) has accepted the explanation of the assessee without getting the fact verified from the AO – the AO was not given the opportunity to verify the correctness of the claim and further the claim of bad debts also requires to be examined – thus, the matter is to be remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee. Deletion of commission income – Held that:- The commission income is in respect of the air travel insurance and the accrual of income depends on the actual journey undertaken by the passenger - If the passenger decides not to undertake the journey and the ticket is cancelled then the insurance also gets automatically cancelled - The commencement of the policy is dependent upon the commencement of the journey and once the ticket is cancelled then there is no question of commencement of the policy - the revised policy of accounting wherein the revenue of the commission on travel insurance is recognized by the assessee only when there is a commencement of the policy and not on mere sale of policy - the accrual of the revenue depends upon the actual journey undertaken by the passenger, the accounting policy of recognizing the revenue only at the time of commencement of the policy is proper and justified – Decided against assessee. Disallowance of payment made - Reimbursement of expenses – Held that:- The parent company namely TCIL is having taxable income and subjected to the highest rate of tax - the sharing of the expenses is revenue neutral - expenses which were relatable to the area being used by different companies e.g. rent/ electricity / rates the taxes, general maintenance, housekeeping and security were allocated on the basis of 'area' being occupied/used by each of these companies - certain expenses which were directly relatable to the employees for e.g. staff welfare, internet usage and resource input were being allocated on the basis of 'head count' of each company - the basis of allocation of expenses is fair and reasonable - the allocation of expenses relating to resource input is on the basis of 'head count' and secondly because no useful tax planning purpose will be served for this group of companies since the appellant as well as the parent company are paying taxes at the same rate – Decided against Revenue.
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