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2016 (11) TMI 248 - AT - Income TaxDisallowance of loss on account of sale of units to bank and non-bank clients - Held that:- Assessing Officer has reproduced the details of such transactions in the assessment order itself which clearly show that assessee had purchased the units before effecting sales and in-fact the mode of delivery has also been tabulated. The salient features of the transactions have not been given cognizance by the Assessing Officer, though the same have been noted by him in the assessment order itself. Similar is the position at the stage of CIT(A) also. Considering the aforesaid factual matrix, which has not been rebutted at any stage, in our view, the instant transactions in units cannot be construed to be ‘buy-back transactions’ because in all the cases the dates of sale are much after the date of respective purchases and further these have been effected through physical /bank receipts, as asserted by the assessee, consistently before the lower authorities. Under these circumstances, in our view, the points raised by the Assessing Officer regarding the illegality in nature of transactions became irrelevant because the entire edifice of the Assessing Officer is based on a misconception that the instant transaction is buy-back in securities. Therefore, on this preliminary issue itself, we do not find any merit to uphold the orders of the authorities below. Consequently, the order of the CIT(A) is set aside and the Assessing Officer is directed to delete the addition. As a consequence, on this issue assessee succeeds. Allowance of expenditure incurred on mobilization of deposits abroad - Held that:- As decided in assessee's own case in previous AYs the objection of the revenue is devoid of legally sustainable merits. As far as the question of expenditure not being debited in the books of accounts of India operations is concerned, this is not really relevant in the light of law laid down by the Hon'ble Supreme Court in the case of Kedarnath Jute Mills Limited (1971 (8) TMI 10 - SUPREME Court ). As long as the expenditure is really incurred and is otherwise deductible, the deduction cannot be declined on the ground that it has not been debited in the books of accounts. We have also noted that as noted in the Assessing Officer’s order itself, the requisite details were duly furnished by the assessee. Keeping all these factors in mind, as also entirety of the case, we deem it fit and proper to delete the impugned disallowance. Addition under section 37(2A) - expenditure in the nature of entertainment - Held that:- It is noticed that the expenditure was claimed to be incurred on assessee’s employees and no outsider was involved and, thus, the same has been rightly treated by the CIT(A) as not to be in the nature of entertainment. In assessment years 1989- 90 and 1990-91, similar expenditures has been held to be allowable by the Tribunal in assessee’s own case. Therefore, considering the factual matrix, the order of the CIT(A) on this aspect is affirmed and Revenue fails. Disallowance on account of salary paid to expatriate employees who were employed in India for the services rendered in India - Held that:- There is no material led by the Revenue to say that employees in question are not rendering services in relation to the India operations of the assessee bank. As a consequence, following the parity of reasoning upheld by the Tribunal in assessment year 1992-93(supra), herein also we affirm the decision of the CIT(A) in deleting the disallowance on account of salary paid to expatriate employees, who were rendering services in India to the assessee bank. Thus, on this aspect Revenue fails.
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