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TMI Blog2014 (6) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... der that the above expenses represented business promotion expenses to which the TDS provisions were applicable. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting addition of Rs.15,64,013/- though this amount represented commission which had already accrued to the assessee in the relevant assessment year. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting disallowance of Rs. 50 lacs which represented payments made by the assessee to Thomas Cook India Ltd., and in respect of which the assessee had not established that the expenses were incurred wholly and exclusively for business purposes. 2. Ground no. 1 is general in nature and does note require any specific finding. 3. Ground no. 2 is regarding disallowance made u/s 40(a)(ia) which was deleted by the CIT(A). The Assessing Officer noted that the assessee has not deducted tax in respect of advertisement and business promotion expenses to the tune of Rs. 40,50,335/- out of various expenses paid to the various parties. Accordingly the Assessing Officer disallowed a sum of Rs. 40,50,335/- u/s 40(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror in the impugned order of CIT(A) in this respect. 3.4 Having considered the rival submissions as well as relevant material on record, we note that the 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 and, further, the correct amount of TDS deducted by the assessee as per the e-TDS return. Therefore, so far as relief granted by the CIT(A) by considering the correct facts which have already been produced by the assessee at the time of assessment, we do not find any reason to interfere with the finding of CIT(A) to that extent. We further note that 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 of Rs. 19,32,706/- towards the bad debts and, therefore, the said amount cannot be disallowed by applying the provisions of section 40(a)(ia). CIT(A) has accepted this explanation of the assessee without getting this fact verified from the Assessing Officer. Since the Assessing Officer was not given the opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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, therefore, 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. Having regard to the nature of policy taken by the passenger for journey, it is clear that the accrual of the revenue depends upon the actual journey undertaken by the passenger, therefore, the accounting policy of recognizing the revenue only at the time of commencement of the policy is proper and justified. The CIT(A) has decided this issue by considering all these aspects and peculiar facts and, therefore, we do not find any error or illegality in the order of CIT(A) qua this issue. 5. Ground No. 4 is regarding disallowance of Rs. 50,00,000/- representing the payment made by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant material on record, we note that it is not disputed that the parent company namely TCIL is having taxable income and subjected to the highest rate of tax, therefore, the sharing of the expenses is revenue neutral. The CIT(A) has decided this issue in para 9.4 as under:- "I have considered the facts of the issue as well as written submissions filed by the AR and find merit in them. A perusal of the ' copy of the return of TCIL filed by the AR indicates that of the TCIL. and the appellant company are having taxable income and are paying taxes at the same rate. Hence, there would be no logical reason for the appellant company to subsidize the parent company by 'reimbursing in excess of what was due from them: An examination of the chart giving the basis/ratio on which . allocation of expenditure has been made between the group companies, it is noted that while some expenses, where specific identification was possible, were being allocated on actual basis. Some, expenses which were relatable to the area being used by different companies e.g. rent/ electricity / rates the taxes, general maintenance, house keeping and security were allocated on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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