TMI Blog2015 (7) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, in our view the expenditure in question is in the revenue field. - Decided in favour of assessee. Disallowance of environmental study expenses - revenue v/s capital - Held that:- The expenditure was incurred for modernisation cum expansion of its existing Rajgangpur Cement Plant. The assessee has to statutorily obtain certain environmental clearances, for which the study has to be made as per the Guidelines of the Ministry of Environment and the Orissa Pollution Control Board. Under these circumstances, we are of the considered opinion, that the expenditure in question is in the revenue field. - Decided in favour of assessee. Disallowance of expenditure incurred on foreign travel - A.O. disallowed 80% of the expenses on ad-hoc basis - FAA making a disallowance of 20% of the total foreign travel expenses on the ground that there is a possibility of personal component in such expenditure - Held that:- adhoc disallowances cannot be sustained, unless there is evidence. The assessee has furnished trip wise details of its Sr.Executives and has also furnished the business transacted in each trip, export details, customer wise details of exports to various countries. Even copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tits and bits. Given below is the date of the month wise production and recovery % starting from 1st April, 2005 to till date which will show that there has been no improvement in recovery %. In fact, even the products that were produced using the knowledge provided by him, have failed. As there has been no commercial production from the knowledge shared by him till date, hence the payments made to him has not resulted in any asset of enduring nature for OCL India Ltd. and is revenue expenditure. We hope you will agree that knowledge till becoming successful is of no use to the company and will therefore be revenue expenditure. As till date that knowledge shared by him has not resulted in any concrete results, hence there has been no commercial exploitation of knowledge shared by him. We have not sub-licensed the knowledge shared by him with us till date. 5.2. The A.O. had held that the assessee has acquired additional assets in the form of technical know-how, as the term technical know-how is covered in Explanation 4 to Sec.32(1), which is an intangible asset and depreciation @ 25% was allowed. 5.3. The First Appellate Authority had upheld the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the CC Refractories manufactured by application of technical know-how/technology transferred by him to OCL and technical assistance provided by him in terms of and as contemplated herein. The right so hereby granted in favour of OCL shall be perpetual and shall not terminate with the expiry of this agreement. 4.2. During the term of this agreement, Mr.Trapp shall not collaborate in any manner, with any other party for manufacture of CC Refractories in India. Clause 5. Sub-Licensing: OCL shall be free to sub-license the technical know-how/technology for the manufacture of CC Refractories and bag manufacture to any of its associates in India. In addition, OCL shall be free to sub-license such knowhow/ technology to any other India party. 7.1. A perusal of these agreements clearly demonstrate that the assessee has acquired technical know-how by way of transfer from Mr.Trapp. The issue to be considered is whether the expenditure incurred for the acquisition in question is in the capital filed or revenue filed. The agreement with Mr.Glenn Trapp is for a period of 04 years. A perusal of this agreement further demonstrates that the expenditure in question was incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee contends that all the persons who have travelled are persons who are employed in the company and who are holding senior positions. It was submitted that Mr.M.H.Dalmia was appointed on 1.1.1970, Mr.R.H.Dalmia was appointed on 19.9.1980, Mr.Gaurav Dalmia was appointed on 21.8.1987 and Smt.Abha Dalmia was appointed on 17.9.1982. It was further submitted that there was substantial increase in the exports from year to year from the A.Y. 2003-04 to 2008-09. It was argued that the expenditure incurred by all the employees of the assessee company, including these Senior Executives comes to only 5.9% of the value of total exports during the year which is ₹ 1660.59 lakhs. It was argued that the A.O. has taken a very narrow view of the fact that during one of the foreign visits Mr.R.H.Dalmia had to visit a Doctor at Boston, USA. It was argued that no adverse inference can be drawn as a person could fall sick during foreign tour and seek medical assistance. Reference was made to the voluminous documents produced before the A.O. as well as the Ld.CIT(A) in support of this expenditure. It was further argued that in all the earlier A.Ys similar expenditure has been allowed excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deleted. 10. Ground no.4 is on disallowance made u/s 14A of the Act. In view of the smallness of the disallowance, the Ld.Counsel for the assessee did not press for the same on the condition that the finding of the A.O. as confirmed by the Ld.CIT(A) would not be considered as a precedence, specifically in view of the decisions of the Tribunal that no notional disallowance can be made u/s 14A on estimate basis. Reliance was placed on the decision of Jurisdictional High Court in the case of DCIT vs. Jindal Photo Ltd. (ITA no.814 of 2011 (Del.)) and other case laws. 10.1. In view of the above submission of the Ld.Counsel for the assessee, we dismiss this ground as not pressed . As we have not adjudicated the issue on merits, this decision of ours on this ground shall not have any precedence value. 11. Ground no.5 is dismissed as not pressed and ground no.6 is consequential in nature. 12. In the result the appeal of the assessee is allowed in part. 13. The appeal in ITA 2843/Del/2011 by the Revenue is on the partial deletion of disallowance of foreign travel expenses by the Ld.CIT(A). In view of our decision while adjudicating ground no.3 of the assessee s appeal, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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