TMI Blog2007 (1) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the order passed by the CIT(Appeals) confirming the additions made by the Assessing Officer is bad in law and deserves to be quashed. 2. That on the facts and circumstances of the case and in law, the CIT(Appeals) erred in agreeing with the Assessing Officer that the fee paid for US GAAP of Rs. 2,53,825 does not relate to the business carried on by the appellant. 3. That on the facts and in the circumstances of the case and in law, the CIT(Appeals) has erred in holding that the fees of Rs. 2,53,825 paid to the auditors for US GAAP work has not been incurred wholly and exclusively for the business operations in India." 2. Rival contentions have been heard and record perused. Brief facts of the case are that the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng (MIS) report their financial results compliant with US GAAP to there head office. 5. As per our considered view, the expression "for the purpose of business" includes expenditure voluntarily incurred for commercial expediency, and it is immaterial if a third party also benefits thereby. The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as business expenditure if it was incurred on grounds of commercial expediency. Commercial expediency also includes voluntary expenditure not having direct and immediate nexus with benefits. Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accordingly the branches were required to prepare and align accounts as per US GAAP. In the present case, the branch had prepared and aligned its accounts at its end with that of head office. For this purpose, the branch had engaged M/s. Lovelock Lewes for alignment of Branch accounts. These branch accounts prepared under US GAAP were subsequently consolidated overseas at the end of the head office for which no amounts were paid to M/s. Lovelock Lewes by the branch and the same were borne by the head office only. We also found that genuineness of the expenditure incurred on audit fee was not doubted. 7. In view of the above discussion, we are inclined to agree with the learned AR Shri Samir Gogia that the disallowance of expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
