TMI Blog2018 (8) TMI 2090X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance on account of Travel expenses - HELD THAT:- After hearing both the sides and on perusal of the order of Tribunal in assessee s own case for the A.Y. 2009-10we find the Tribunal has not approved the system of making adhoc disallowance adopting the flat rate of 10%.Revenue has not brought anything on record to demonstrate the facts of the issue for the year under consideration are anyway different. Considering the above, we are of the opinion that the assessee s claim for allowing the travelling and conveyance expenses is allowed in favour of the assessee Adhoc disallowance on account of telephone expenses - Considering the above of the Tribunal against the adhoc disallowance in assessee s own case and the decision of CIT(A) on this issue, we are of the opinion that the disallowance made by the AO on this telephone expenses cannot be sustained. Accordingly, Ground raised by the Revenue is dismissed. Denial of Claim of deduction u/s.35AB - scope of expression paid used in the sub-section (1) of section 35AB - HELD THAT:- We proceed to explain if the expression paid used in the sub-section (1) of section 35AB covers this arrangement of assessee in not paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making payment/allotting shares to the supplier of the technical know-how. The expression consideration is not synonymous with the word expression expenditure used in section 37(1) of the Act despite the fact the title of section 35AB refers to the word expression expenditure . Liberal Interpretation - The onus is on the assessee to demonstrate the facts leading to the applicability of the said section. As detailed in the preceding paragraphs of this order the information relating to the relationship between the DBAG and MBAG are not coming forth from across the borders. It is an admitted fact that the reasons are absent as to why the shares were allotted to the non supplier of the technical know-how. We understand had the assessee eventually allotted the shares directly to the supplier, our inference could have been different. The payment by way of allotment of shares is never to the supplier of the technical know-how in this case which makes inapplicability of the principle of liberal interpretation to the facts of the present case. The transactions between the assessee on one side and the MBAG and DBAG on other side are not transparent so far as the transactions betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, we are of the opinion that despite the laborious arguments made by the Ld. Counsel for the assessee, the ground No.1 raised by the assessee need to be dismissed. Accordingly, the Ground No.1 of the assessee s appeal is dismissed. Write off of the Capital Work-in-progress - HELD THAT:- We find the decision of CIT(A) given is not complete in all respect which includes that the CIT(A)/AO never discussed the details of the said expenditure on one side and applicability of the relevant legal propositions on the other while deciding the issue by the CIT(A). It is understood that every case has its peculiar facts but the philosophy relating to the decision to describe particular expenditure as capital or revenue is already discussed by the Hon ble jurisdictional High Court as well as Hon ble Apex Court. The legal propositions described by other High Courts also contribute to the evolution of thought on this issue. Therefore, in our view, there is requirement of remanding this issue to the file of AO for want of a decision on facts as well as application of legal propositions. As such, we never had the benefit of knowing the details of expenditure amounting to Rs.9,79,25,979/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring benefit to the assessee and does not partake the character of revenue expenditure. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the disallowance of Rs.47,71,593/- made out of travelling expenses, as it is not verifiable that the entire expenditure has been incurred wholly and exclusively for the purpose of assessee s business. 3. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the entire addition of Rs.10,000/- lakhs (sic) made out of telephone expenses since the personal use of telephone cannot be ruled out. 4. The order of the CIT(A) may be vacated and that of the AO be restored. 5. The appellant craves leave to add, amend or alter any of the above grounds of appeal. Grounds by Assessee : 1. On the facts and in the circumstances of the case the CIT(A)-III, Pune has erred in : 1. Disallowing Rs.12,55,52,666/- towards portion of the Technical Know-how expenses paid in kind and claimed by the assessee under section 35AB of the Income Tax Act, 1961. 2. Disallowing expenditure of Rs.9,79,25,959/- in respect of write off CWIP due to discontinuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68,47,448 xiv) Provision for unrealized loss on Foreign Exchange 1,76,52,992 xv) Assets written off 4,98,93,086 xvi) Disallowance Capital Loss 9,79,25,924 xvii) Loss on sale of assets 1,76,88,375 xviii) Reallocation of expense 37,80,388 xix) Interest payment of Daimler Benz 2,32,28,218 xx) Renovation expenses 21,78,402 xxi) Payments to clubs 1,67,600 xxii) Out of travelling expenses 47,71,593 xxiii) Out of telephone expenses 10,00,000 83,01,07,312 41,60,41,521 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses amounting to Rs.37,80,388/-: The facts relating to that the assessee employs specialists/expatriates in various fields from Daimler Chrysler Project Consultant (DCPC). There is an agreement in this regard. According to the agreement, assessee is under contractual obligation to pay the expenses on travel to the said specialists/expatriates and their families as well as transportation of their furniture etc. to and fro from India. These expenses which are borne by the assessee are in the nature of salary paid to the expatriates. These payments are taxable in their hands according to the provisions of the Income Tax Act. The expenses incurred on travel and transportation constitutes Revenue expenditure. Therefore, the same is debited to the profit and loss account as they are incurred wholly and exclusively for the purpose of business of the assessee. However, the AO did not allow the said claim for want of evidence and held that in the absence any material evidence to show that the same were incurred wholly and exclusively for the purpose of business, the same constitutes personal expenses. However, during the First Appellate proceedings, assessee furnished requisite informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee which could be held as disallowable as capital expenditure. The services of such experts were undertaken only for the contact and improvement of the business. In this view of the matter, we do not find any infirmity in the order of the CIT(A) in deleting the impugned addition. The ground No.1 raised by the revenue is thus rejected. Revenue has not brought anything on record to demonstrate the facts of the issue for the year under consideration are anyway different. Considering the above, we are of the opinion that the order of CIT(A) is fair and reasonable and it does not call for any interference. Accordingly, Ground No.1 raised by the Revenue is dismissed. 12. Issue No.2 relating to adhoc disallowance on account of Travel expenses Rs.47,71,593/- and Telephone Expenses (Rs.10,00,000/-). Facts relating to this issue include that the assessee claimed traveling expenses and conveyance expenses amounting to Rs.47,71,593/- and debited the same to the profit and loss account. AO found the absence of third party vouchers and therefore, on adhoc basis, i.e., 10% of the claim, was disallowed. Similarly, out of telephone expenses claimed amounting to Rs.1,84,14,978/-, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the impugned addition. Revenue has not brought anything on record to demonstrate the facts of the issue for the year under consideration are anyway different. Considering the above, we are of the opinion that the assessee s claim for allowing the travelling and conveyance expenses is allowed in favour of the assessee. To that extent, the order of CIT(A) is fair and reasonable and it does not call for any interference. Ground No.2 raised by the Revenue is dismissed. 16. Further, the issue of adhoc disallowance on account of telephone expenses, is raised for the first time in this year. AO made disallowance of a portion of expenditure on adhoc basis. There is no finding of fact why such disallowances are called for in this assessment year, when the claim of the assessee is allowed in the earlier assessment years. However, it is the claim of the assessee before us that the very fact the manner of making disallowance on adhoc basis is not approved by the Tribunal, therefore, the approach of the AO resorting to such adhoc disallowance of the claim on account of telephone expenses should also be not approved by the Tribunal. 17. On hearing both the sides, we find it relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to convert the sum payable by DCIPL as its capital contribution. Accordingly, being the Ist installment, DBAG the Panchayat Germany was allotted 3,72,42,800 equity shares worth Rs.37,24,28,000/- (DM 18.8 million) in November 1995. In this connection, the AO granted NOC for such allotment and the TDS amounting to Rs.8.05 crores (rounded off) was done as per the rules on the said allotment. A TDS certificate was issued in the name of MBAG who supplied the technical know-how to the assessee. Subsequently, the second instalment was recorded as payable in the A.Y. 1996-97 and allotted shares worth Rs.42.30 crores. In this connection, assessee made TDS of Rs.8.43 crores (around) as per the rules in this regard. It was informed that two other instalments of the payment were waived. A table showing the details of payment of instalments and the quantitative details of Rs.16,19,41,319/- is given as under : Particulars First Instalment (Rs.) Second Instalment (Rs.) Total (Rs.) Shares allotted 37,24,28,000 42,30,00,000 79,54,28,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability of technical know-how supplied by MBAG to assessee was not accepted by the AO. AO is of the opinion that the said allotment of shares towards capital contribution in DCIPL-the Indian company, does not amount to expenditure at all to become eligible for claim of deduction u/s.35AB of the Act. AO relied heavily on the judgment of Hon ble Supreme Court in the case of CIT Vs. EIMCO KCP Ltd. 242 ITR 659. CIT(A) upheld the said disallowance following his order later for the A.Y. 1999-2000. 22 . Status of similar issue in earlier A.Yrs. (A): An attempt was made by the Revenue to deny the claim us.35AB of the Act in the A.Yrs. 1995-96, 1996-97 and 1997-98 either under the provisions of section 148 or u/s.263 or u/s.154 of the Act, as the case may be. In all these 3 years, the proceedings were quashed for one reason or the other on technical grounds. In effect, this issue is not yet decided conclusively by the Tribunal or any other judicial body on merits. Therefore, the issue raised in this year requires to be adjudicated for the first time on merits. (B) Further, it is also relevant to note that similar addition was made in the A.Y. 1999-2000 and the matter reached th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying on the judgment of Supreme Court in the case of CIT Vs. EIMCO KCP Ltd. (supra) and held that the same is inapplicable to the facts of the present case. According to Ld. AR, therefore, the claim of the assessee should be allowed. Further, referring to the judgment of Bombay High Court in the case of CIT Vs. Paul Brothers 216 ITR 548, Ld. Counsel for the assessee submitted that when the claim of deduction u/s.35AB is undisturbed in the first assessment year of the claim of deduction u/s.35AB of the Act, the AO cannot disturb the similar claim in the subsequent years. On merits of the provisions of section 35AB of the Act, Ld. Counsel analysed the provisions of the said section and mentioned that the meaning of expressions paid and lump sum consideration are met in substance. Further, differentiating the expressions, i.e. expenditure and consideration , Ld. Counsel submitted that the expression consideration is not similar in meaning to the expenditure as referred to by the AO in his order. Expanding the same, Ld. Counsel submitted that expenditure restricts itself to something; whereas the expression consideration can be in the nature of mandatory payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d relied on various decisions. Further, Ld. Counsel relied on the decision of Pune Bench in the assessee s own case for the A.Yrs. 1996-97, 1997-1998 and mentioned that the Tribunal made some references to the issues under consideration though the re-assessment orders/revisions orders was quashed on technical grounds. Ld. Counsel mentioned that, in the context of the observation of the Tribunal in own case, it is simply a method of accounting, mode of payment the allotment of shares to clear the debt definitely has not changed the character of payment of lump sum consideration (para No.37 of the written note) paid for acquisition of the technical know-how. Therefore, the claim of deduction u/s.35AB of the Act is allowable. Further, on the application of Supreme Court judgment in the case of CIT Vs. EIMCO KCP Ltd. (supra), Ld. Counsel submitted that the said judgment is inapplicable to the facts of the present case and the details are given in Para No.39 and 40 of the written note. He also furnished rebuttal to the conclusions in the order of CIT(A) for the A.Y. 1999-2000 in his note. Referring to the expression term Paid used in the sub-section (1) of section 35AB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the technical know-how agreement with MBAG, and further the said liability is settled by issuing shares to DBAG, the same should be considered to have satisfied the term 'paid' for section 35AB. It is the argument of the Ld. Counsel for the assessee that, by allotment of shares, by the assessee to Daimler Benz AG at the instance of MBAG who supplied the technical know-how to the assessee as per the contractual agreement, the conditions relating to the lump sum consideration and paid are met. Therefore, the claim of the assessee relating to deduction u/s.35AB of the Act is allowable. Further, he submitted that these provisions of section 35AB of the Act, being beneficial one there is a requirement of interpreting the provisions in favour of the assessee. For this proposition, he relied on the following judgmental laws : 1. Bajaj Tempo Ltd. Vs. CIT 196 ITR 188 2. CIT Vs. M/s.Vegetables Products Ltd. 88 ITR 192 3. Gannon Dunkerly Co. Ltd. Vs. CBDT 159 ITR 162 (Bom.) Ld. Counsel for the assessee submitted that once the assessee incurs any cost towards acquisition of know-how, the deduction for the same was always intended to be allowed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the very outset agreed that share capital would be contributed in kind as a part of subscription capital. d. Reliance is also placed on the judicial pronouncement of the Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs Reinz Talbras Pvt. Lid. (2001) 252 ITR 637 (Del) (refer page 968 to 970 of the Paper book). While interpreting the ratio of EIMCO decision, the Hon'ble High Court held that the amount attributable to technical knowhow which is discharged by way of issue of shares by a new company was not revenue expenditure, but it is to be treated as capital expenditure. Thus, the Delhi HC has not treated technical know-how as contribution towards share capital but a capital expenditure. e. Hon'ble ITAT in MB India's own case for AY 1996-97 and AY 1997-98 has also rightly observed that the Supreme Court decision in EIMCO (supra) is not applicable to the facts of MB India. f. Hon ble Madras High Court in EIMCO s case itself refers to payment of technical know-how as a consideration in two separate places in its order. He further submitted that AO issued NOC to MB India Ltd., in order to issue equity shares towards remittan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble ITAT on account of technical grounds as the reassessment proceedings were not held to be valid. The contention of the Revenue therefore, is that adjudication on admissibility on deduction u/s.35AB could not be examined on merits and, therefore, deduction u/s. 35AB cannot be said to have been allowed in the AY 1995-96 i.e. the first year on merit. During the course of the hearing before the Hon'ble ITAT, the judgement of the Hon'ble Supreme Court in the case of DCIT Bangalore Vs ACE Multiaxes System Ltd. [(2017) 88 taxmann.com 69 (SC) was relied upon to make a proposition that each assessment year is a different assessment year, except for block assessment. The Hon'ble Supreme Court on the issue of liberal interpretation has held that construing liberally does not mean ignoring conditions for exemption. The copy of the impugned case law has already been submitted before the Hon'ble Bench during the course of the argument made by the undersigned. 7. During the course of the argument, the undersigned had also relied on the decision of the Hon'ble High Court of Bombay in the case of CIT vs Triumph International Finance (I) Limited [2012] 22 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant of the same. Therefore, we proceed to adjudicate this issue as per the contents in the succeeding paragraphs. A. The provisions of section 35AB : The provisions of section 35AB of the Act relating to expenditure on know-how is extracted here as under : 35AB(1) Subject to the provisions of sub-section (2), where the assessee has paid in any previous year [relevant to the assessment year commencing on or before the Ist day of April, 1998] any lump sum consideration for acquiring any know-how for use for the purpose of his business, one-sixth of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance amount shall be deducted in equal instalments for each of the five immediately succeeding previous years. Explaining of the provisions : The above provision provides for allowing deduction equivalent of 1/6th of the amount paid by the assessee for acquiring know-how for use for the purpose of his business in any previous year specified in the sub-section (1). The said deduction is allowable in six equal instalments on fulfillment of the basis of paid and any lump sum consideration . Expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1995-96 onwards. The following chart shows the transaction among MB India Ltd., MBAG and DBAG : With this legal and factual background of the issue, we proceed to explain if the expression paid used in the sub-section (1) of section 35AB covers this arrangement of assessee in not paying the money at all to the supplier MBAG and allotting of shares equivalent of Rs.100.32 crores to the DBAG, the flagship company of the assessee. B. Meaning Paid , Actually paid Etc.: During the proceedings before us, Ld. Counsel for the assessee submitted that the expression paid used in the sub-section (1) of section 35AB is broad enough to include the transactions under scrutiny involving the element of shares to the DBAG who is not the actual supplier of the know-how. Knowhow is actually supplied by the MBAG. It is an admitted fact that the assessee did not make the payment in cash/banking channels to the MBAG, the supplier of the know-how. It is also an admitted fact that the assessee did not allot any shares leave alone worth of Rs.100.32 crores to the supplier of the know-how. The allotment is done to the DBAG. Nothing is brought to our notice to demonstrate the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the expression paid , we are of the opinion that the expression paid is already defined in the statute which means actually paid . The use of the expression actually paid in section 35ABA of the Act is necessary in the context of actual payment and not otherwise. Therefore, the expressions used in section 35AB and the expression actually paid in section 35ABA has to be interpreted after considering the definition specifying the said expression paid in section 43(2) of the Act. If the same is considered, in our view, the shares so allotted by the assessee cannot be considered as allotted towards the liability to the MBAG, the supplier of the company. Ld. Counsel for the assessee could not demonstrate as to why the shares were allotted to the DBAG and if the said allotment was done for squaring up of any liabilities between MBAG to DBAG. On this issue, it is a failure to discharge the onus from the assessee s side. Notwithstanding the same, we also find if the allotment of shares constitute exchange of shares against acquisition of know-how. Normally, the exchange occurs between the parties with reference to the goods. It may involve money worth and certainly not the mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to why the shares were allotted to the non supplier of the technical know-how. We understand had the assessee eventually allotted the shares directly to the supplier, our inference could have been different. The payment by way of allotment of shares is never to the supplier of the technical know-how in this case which makes inapplicability of the principle of liberal interpretation to the facts of the present case. The transactions between the assessee on one side and the MBAG and DBAG on other side are not transparent so far as the transactions between the MBAG and DBAG are concerned. E. Judgment in the case of EIMCO K.C.P. Ltd . : Further, the applicability of the decision of Hon ble Supreme Court in the case of EIMCO KCP Ltd., reported in 242 ITR 659 (SC), we find the Ld. Counsel for the assessee is right in stating that the said decision was delivered in the context of the provisions of section 37(1) of the Act qua the expenditure and the revenue expenditure . Facts of this case include that the said company was floated originally by the American company as well as Indian company. The technical know-how was supplied to the Indian company against which shares were allott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factual matrix of this case. In effect, the supplier did not receive any payment literally to its account either in the form of cash or in the form of kind from the assessee. As such, it is the admitted position that there is no direct case law on any one of the issues discussed in (a) to (f) above. Therefore, we are of the opinion that despite the laborious arguments made by the Ld. Counsel for the assessee, the ground No.1 raised by the assessee need to be dismissed. Accordingly, the Ground No.1 of the assessee s appeal is dismissed. 30. Issue relating to write off of the Capital Work-in-progress : During the assessment, assessee wrote off an amount of Rs.9,79,25,979/- as an allowable capital work in progress. The same relates to disallowance of expenditure in relation to write off of capital work in progress due to discontinuation of India Car Model W-124. Relevant facts include that the assessee (MB India) is engaged in the manufacturing and sale of Mercedes Benz passenger cars in the Indian market. Various cars were brought through semi knocked down (SKD) or completely knocked down (CKD) condition to be assembled and sold in India. There was a Joint Venture agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the decision for writing off of expenses of a new plant was based on commercial expediency of the Appellant. Hence, the same has to be treated as business loss deductible under section 28 of the Act. The relevant observations of the Hon'ble ITAT are reproduced below : (Refer Pages 690 to 754 of the Paper Book): Such a claim can at best be examined on the touchstone of principles regarding admissibility of business losses, but that exercise has not been done by any of the authorities below....... he claim of deduction arose when the expenses were written off, and as such business loss was incurred, on the ground of commercial expediency - an act which certainly happened in the financial year relevant to the assessment year before us. However, there is no material before us to support the factual contentions embedded in the stand of the assessee, nor have the related facts been ascertained by any authorities below. Therefore, we consider it fit and proper to remit this issue also to the file of the Assessing Officer for adjudication de novo in the light of our above observations. Let the Assessing Officer examine all the factual contentions and legal pleas of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases : 1. M/s. Binnal Cement Ltd. Vs. CIT Income Tax Appeal No.265 of 2009 (Cal.) 2. CIT Vs. Anjani Kumar Co. Ltd. 259 ITR 114 3. Excel Industries Ltd. Vs. DCIT 86 TTJ 840 (Mumbai) 4. Lawkim Ltd. Vs. JCIT 1 SOT 908 (Mum.) 5. CIT Vs. M/s. Idea Cellular Ltd. Appeal No.516 of 2015 (Bombay High Court) Thus, it is the case of the Ld. Counsel for the assessee that in a case where assessee had a proposal to expand business into different product lines of manufacturing of Cars, i.e. W-124 and when the project has to be aborted for the reasons of business operations of the assessee, such expenditure although capital in nature, is required to be allowed as business expenditure for the year under consideration. The said expenses are allowable u/s.37(1) of the Act. Referring to the cases referred above, he submitted that in all those cases aborted expenses, which may be capital in nature, are found as allowable deduction u/s.37(1) of the Act. 34. Per Contra, Ld. DR for the Revenue relied heavily on the orders of AO/CIT(A). Essential core argument of the Revenue is that the said expenses being capital in nature are not allowable expenses against the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see wrote off the factory layout expenses in the A.Y. 1999-2000, the same was finally allowed by the Tribunal vide order dated 21-01-2009. The write off of the said sum of Rs.9,79,25,979/- constitutes business loss. Relying on the various decisions, Ld. Counsel demonstrated that the said claim is allowable as the project failed to take off eventually. Referring to the Calcutta High Court judgment in the case of M/s. Binani Cement Ltd. Vs. CIT ( a case of construction of a new facility which is abandoned at the work in progress stage), CIT Vs. Anjani Kumar Co. Ltd. 259 ITR 114 (Raj.) (a case where assessee made advance for purchase of agricultural land for setting up a broiler factory which is eventually abandoned and therefore advance became irrecoverable), Excel Industries Ltd. Vs. DCIT 86 TTJ 840 (Mumbai) (a case of incurring of project expenses on a new project which is abandoned claimed as allowable expenses), Lawkim Ltd. Vs. JCIT 1 SOT 907 (Mumbai) ( a case of acquiring technical knowhow for manufacturing of new line of products which was later abandoned, CIT Vs. M/s. Idea Cellular Ltd. Appeal No.516 of 2015 Bombay High Court ( a case of claim of capital expenditure on proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that Para No.79 to 86 contain the relevant discussion, decision of the AO/CIT(A) as well the assessee s contentions. 39. Relevant facts of the case include that assessee made payment of Rs.1,67,600/- to various clubs and hotels for conducting meeting/conferences for the employees of the assessee. Assessee claimed the said expenses as business expenses. AO disallowed the said expenses treating the same as personal in nature and not wholly for the purpose of business of the assessee. CIT(A) gave part relief to the assessee and restricted the disallowance to Rs.25,600/-. 40. On this issue, Ld. Counsel filed the written submissions and the same are reproduced here as under : 83. The company had also incurred expenses for obtaining membership in the Poona Club golf course and Hyatt Regency hotel, Delhi, for benefit of the employees and for conducting meeting and conferences in the hotels. 84. Thus, the above expenditure are incurred purely to serve business purpose of the Appellant. 85. The appellant wishes to rely on the following decisions, where club expenses are allowed as business expenditure: Otis Elevator Co. (India) Ltd vs CIT (1992) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Weigand and Dr. Till Becker Defreitas. Considering the appearance of individual names of the employees, the CIT(A) held that these are in the nature of personal expenditure. Contents of Para No.5.3 are relevant. On perusal of the note given by the Ld. Counsel for the assessee which is extracted above, we find the facts of the decisions cited by the Ld. Counsel for the assessee are distinguishable. It is not the case of the assessee that the employees were not benefitted and the expenditure is wholly and exclusively for the business purposes of the assessee. For the sake of completeness, we reproduce the finding given by the CIT(A) in Para No.5.3 of his order and the same reads as under : 5.3 The submissions have been considered. The expenditure incurred for the annual subscription of the Poona Golf Course of Dr. Volkar and Shri R. Leoffler is clearly the personal expenses of the employees and it has no connection with the business of the appellant. Similar were the expenses in regard to the membership of the two executives for Hyatt Regency, Delhi which are the personal expense of the executives not connected with the business of the appellant but incurred by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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