TMI Blog2009 (11) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... in disposing of an appeal and the scope of his power is co-terminus with that of the Income-tax Officer. This has been interpreted by various Courts that the CIT(A) would have the same powers as the Income-tax Officer. In any case, the issue regarding training expenses was raised by the AO himself. Though the addition was made from a different angle and CIT(A) has invoked another angle by holding that why training expense should not be considered as fee for technical services. Merely because a new angle has been examined, it cannot be said that a new source of income has been created by the CIT(A). Therefore, we find no force in this issue and dismiss the same. We find that during the assessment proceedings AO noticed that assessee had claimed expenses towards training cost. He further found that as per the claim the expenses included stay and travel cost. According to him the cost of stay was much higher and thus the expenses were on higher side. After excluding the travel expenses he disallowed 50 per cent of the balance of expenses. Addition u/s 40(a)(ia) - As common sense would tell us that training expenses cannot be called as fee for technical services . In the moder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that sums were paid for the purpose of business. In view of this, we find nothing wrong in the order of the learned CIT(A) and we confirm the same. In the result the appeal is dismissed. - T.R. SOOD AND R.S. PADVEKAR, JJ. Sanjiv M. Shah for the Appellant. Ajit Kumar Sinha for the Respondent. ORDER 1. These cross appeals filed by the assessee and the revenue are directed against the orders of the Commissioner of Income-tax (Appeals)-VIII, Mumbai, for the assessment years 2000-01 and 2001-02. ITA No. 940/M/04 : Assessment year 2000-01 2. In this appeal, the assessee has taken the following two grounds : "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in issuing a notice dated 17-10-2003 for enhancement under section 251(2) of the Income-tax Act read with Explanation thereto which has consequently resulted in disallowance under section 40( a )( i ) to the extent of Rs. 19,01,162. He ought not to have done so. 2. Without prejudice to Ground No. 1 on the facts and in the circumstances of the case and in law, the learned CIT(A), has erred in holding that the training expenses of the surveyors pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancement notice, it cannot be said that CIT(A) has formed a new source of income. 7. We have considered the rival submissions carefully and find force in the submission of the learned Departmental Representative. Hon ble Supreme Court in the case of Kanpur Coal Syndicate ( supra ) made it clear that first appellate authority has plenary powers in disposing of an appeal and the scope of his power is co-terminus with that of the Income-tax Officer. This has been interpreted by various Courts that the CIT(A) would have the same powers as the Income-tax Officer. In any case, the issue regarding training expenses was raised by the Assessing Officer himself. Though the addition was made from a different angle and CIT(A) has invoked another angle by holding that why training expense should not be considered as fee for technical services. Merely because a new angle has been examined, it cannot be said that a new source of income has been created by the CIT(A). Therefore, we find no force in this issue and dismiss the same. 8. In regard to ground No. 2, after hearing both the parties, we find that during the assessment proceedings Assessing Officer noticed that assessee had claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified staff was employed as surveyors but still they required hands on experience and that is why they were sent for training to the principal company. The training expenses paid by the assessee company included boarding and lodging expenses and major portion pertained to such expenditure and that aspect has been totally ignored by the learned CIT(A). 12. He also referred to various decisions relied on by the learned CIT(A) and pointed out that as far as the decision in the case of Steffen, Robertson Kirsten Consulting Engineers Scientists, In Re ( supra ) rendered by the Authority for Advance Ruling is concerned same is factually distinguishable and in any case the Ruling given by the AAR is confined to the facts of a particular case and cannot be treated as a precedent. The other two cases also involved different facts and none of them was dealing with the training expenses. Therefore, the law relied on by the learned CIT(A) is totally distinguishable. He also submitted that such training was imparted abroad and even if such training is construed as fee for technical services and such services were never rendered in India or utilized in India, and therefore, the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amining various electrical and other equipments. Such training in our view is a continuous process because technology is changing very fast and one needs to keep touch with such technology and therefore, expenses incurred towards training cannot be termed as "fee for technical services". In any case, the case before us major amount has been paid by way of reimbursement for boarding and lodging arrangements also for which no separate claims have been made. Therefore, according to us, the training fee cannot be termed as "fee for technical services". 15. We further find that the learned CIT(A) has not dealt with the aspects whether such expenditure was excessive, or not as held by the Assessing Officer. Thus, while holding that these training expenses are not in the nature of fee for technical services, we remit the matter back to the file of the CIT(A) for examining whether the expenditure on training is excessive or not as held by Assessing Officer after providing adequate opportunity to the assessee of being heard. 16. In the result, the appeal is partly allowed for statistical purposes. ITA No. 7628/M/2004 - Assessment year 2001-02 17. In this appeal, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that assessee company was making annual contribution to various employee s welfare trusts. Out of trust s funds investments were to be made and while withdrawing these amount, the same was misappropriated by the brokers. The assessee company launched criminal proceedings against the brokers. It was also explained that though the fund was insured, the insurance company had stipulated for the payment of damages only in the case of part of the misappropriated fund borne by the company. Hence, that part was paid by the assessee-company. It was also argued that the assessee was a service oriented company and was banking heavily on the performance of its employees and the employees had lost because none of their fault, the assessee thought it fit to make the payment to keep moral of the employees high. Thus, the expenditure was incurred for the purpose of business. Reliance was placed on the decision in CIT v. Sinnar Bidi Udyog Ltd. [2002] 257 ITR 216 (Bom.), Triplicane Permanent Fund Ltd. v. CIT [1989] 179 ITR 492 (Mad.), Chief Commissioner (Admn.) v. Karnataka Electricity Board [1992] 197 ITR 48 (Kar.), CIT v. B.G. Shirke Co. [2003] 264 ITR 83 (Bom.). 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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