9911796707
TMI Blog1998 (11) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT(A) erred in law and on facts by restricting the allowances to 50 per cent of salary claimed at Rs. 12,80,930. 2. The learned CIT(A) erred in disallowing 10 per cent of the staff welfare expenses on estimate at Rs. 8,305. 3. The learned CIT(A) erred in disallowing 10 per cent of the miscellaneous expenses on estimate at Rs. 20,868." 3. The assessee-company is a French non-resident company having a permanent establishment (PE) inIndia, manufacturing gas turbine. The company Was awarded a contract by DESU on 16th Sept., 1985, for unloading, custom clearance, handling, transportation to site, erection storage, setting to work of imported equipment and engineering design, manufacture, inspection, testing at works, packing, tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; French Franc (i) Mr. Nami 1,92,647 (ii) Mr. Khoudja 1,60,617 (iii) Mr. Deloye 1,60,617 (iv) Mr. Paschaki 80,308 -------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were exclusively deployed for looking after the DESU Project inIndia. Mere submission of the certificate of auditors of the foreign company or auditors of the Indian branch cannot justify deduction in respect of entire amount of the said expenditure. He relied upon the reasons mentioned in the assessment order and urged that the order of the AO should be restored. 4.5. The learned counsel for the assessee strongly supported the order of the CIT(A). He further submitted that there is no question of bifurcation of the said expenditure incurred inFrancewhich is reasonably allocable to the Indian Projects. The auditors of the foreign company have duly certified that the expenses debited to the Indian branch represent amounts incurred which pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; paid in FF ------------------------------------------------------ (1) Namy 12 45.49 11,000 1,92,647 (2) Khoudja 12 48.72 9,000 1,60,617 (3) Deloye 12 48.72 9,000 1,60,617 (4) Paschali 6 48.72 9,000 80,308 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad office pertaining to Indian operations have been included in the accounts on the basis of debit notes of head office and its statement of expenses as certified by the head office auditors vide their report dt.4th June, 1987. 5.3. The relevant art. III(3) of double taxation agreement betweenIndiaandFranceis reproduced hereunder: "Art. III(3): In determining the industrial or commercial profits of a permanent establishment, there shall be allowed as deductions all expenses, wherever incurred reasonably allocable to such permanent establishment, including executive and general administrative expenses so allocable." 5.4. There is no dispute that the appellant foreign company had a permanent establishment inIndiain the relevant year. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or before the Tribunal stating that the abovenamed 4 persons exclusively worked for the Indian project during the period for which salary paid to them has been allocated, for the Indian project and these persons did not look after any work of project at Pakistan during the same period. In the absence of any such evidence, the CIT(A) was right in making an estimate of the amount of expenditure incurred on salary of these 4 persons which is reasonably allocable for the Indian project. The AO had estimated 10 per cent of the total amount of salary paid to them as reasonably allocable to the Indian project. The learned CIT(A) after taking into consideration the entire relevant facts and material, came to the conclusion that it would be just an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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