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Income Tax Appellate Tribunal, DELHI BENCHES : “I” NEW DELHI
Before: SMT. DIVA SINGH & SHRI T.S. KAPOOR
PER BENCH These are cross appeals filed by the assessee and revenue against the order of DRP dated 26.12.2013 and dated 21.11.2014 for assessment year 2009-10 and 2010-11 respectively. In the appeal filed for assessment year 2009-10 the assessee vide ground No. 2 to 2.6 has raised its grievance with the action of learned DRP by which it upheld the addition on account of transfer pricing adjustment amounting to Rs. 20121113/- for advertisement marketing and sale promotion expenses. In various sub grounds of appeal listed in 2.1 to 2.26 the assessee has raised various objections on which the addition has been challenged. In ground No. 3 the assessee has raised its grievance regarding upholding of disallowance of overseas representation charges and reimbursement of expenses to overseas representatives due to non-deduction of tax at source. Vide ground No. 3.1 to 3.5 the assessee has raised various arguments against upholding of this addition. Ground No. 4 is for levy of interest u/s 234B which is consequential and do not require any addition. Ground No. 5 is against initiation of penalty proceedings u/s 271(1)(c) which is premature and in view of the above ground No. 4 and 5 are dismissed.
2. The revenue is aggrieved on three deletions made by DRP. Ground No. 1 relates to deletion of addition of Rs. 5,16,542/- made by the AO for excess claim of depreciation made by Assessee on computer peripherals.
[Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels 2.1 Ground N.2 relates to the action of the learned DRP by which it had deleted the addition amounting to Rs.13,93,42,766/- which the A.O had made for non deduction of tax at source on tour expenses.
2.2 Ground No. 3 relates to the action of DRP, whereby it deleted the addition of Rs. 3,42,96,779/- made by AO u/s 40(a)(ia) on account of payment to overseas representatives without deduction of tax at source.
In Asst. Year 2010-11 the grounds raised by assessee vide ground No. 2 to 2.22 are similar as is ground No. 2 in assessment year 2009-10. Similarly ground raised by assessee vide ground No. 3 to 3.3 are similar to ground No. 3 in assessment year 2009-10 with the difference that in assessment year 2010-11 besides the issue of representation charges the issue is also of reimbursement of expenses paid to overseas representatives. Vide ground No. 4 the assessee is aggrieved with the disallowance of advertisement and publicity expenses and other charges representing AMC for computer software and membership & subscriptions paid to non-resident entities without deduction of tax. Ground No. 7 & 8 relates to levy of interest and initiation of penalty proceedings which are consequential and pre mature respectively and therefore these are dismissed. Ground No.1 being general do not require any adjudication and therefore is dismissed. Ground No. 5 & 6 are regarding grievance of Assessee whereby Assessing Officer has not given full credit for tax deduction at source.
[Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels
The revenue in assessment year 2010-11 vide ground No. 1 is aggrieved with the action of DRP by which it had deleted the additions made by AO u/s 40(a)(ia) of the Act. Vide Ground No.2, the Revenue is agreed with the action of DRP by which it reduced the disallowance made by A.O from Rs. 3,76,59,563/- to Rs.1,23,01,374/-.
These appeals were heard together and therefore for the sake of convenience a common and consolidated order is being passed.
The brief facts of the case are that the assessee is engaged in the business of organising tours and arrangements for foreign tourists coming to India and going out of India. The assessee provides all services to tourists beginning from travelling to India till their departure from India such as travel in India by all modes of transports like air, rail, road etc. The assessee also provides boarding and lodging facilities, and sightseeing services etc. The assessee is also engaged in providing tourists services to tourists from India. In order to promote business in foreign countries the assessee has appointed agents in various countries to market its services and in lieu thereof representation charges/ retainership fee and commission is paid to them.
5.1 At the outset the Ld. AR submitted that in fact there were additions in both years on account of two issues out of which one relates to transfer pricing adjustment on account of brand building expenditure and other related to addition on account of non deduction of TDS on payments to overseas agents on account of reimbursement of expenses and on account of payment of representation charges.
Ld. AR submitted that the addition on account of overseas representations charges [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels and reimbursement of expenses to overseas representatives is covered in favour of assessee by order of Hon’ble Tribunal dated 19th December, 2014 in the case of assessee itself for assessment years 2007-08 and 2008-09.
Ld. AR invited our attention to para 12 onwards of Tribunal order and submitted that Hon’ble Tribunal after analysing the functions of agents and that of the asesseee had arrived at the conclusion that the payments made by assessee were not in the nature of managerial, technical or consultancy services and therefore were beyond the scope of section 9(i)(vii) of the Act and therefore the assessee was not required to deduct TDS. Ld. AR submitted that the above Tribunal order has been upheld by Hon’ble Delhi High Court in and 491/2015 vide order dated 10th August, 2015 and in this respect filed a copy of order of Hon’ble Delhi High Court. Ld. AR submitted that since the facts and circumstances remains same and therefore the addition confirmed by DRP is a covered issue in favour of assessee.
6.1. As regards transfer pricing adjustment Ld. AR submitted that assessee had incurred certain expenditure on advertisement marketing and sale promotion for inbound travel services and for outbound travel services and for which the AMP expenses / sale ratio was 2.80% and 3.6% respectively and the consolidated ratio of AMP expenses to sales were only 3.79%. Ld. AR submitted that TPO held that assessee was creating market intangibles in favour of associate entrepreneur and made adjustment in the outbound business segment by applying the bright line test and by comparing AMP expenses incurred by in comparables engaged in inbound [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels business segment. Ld. AR invited our attention to the case law of Sony Ericsson Mobile Communications India Pvt. Ltd. vs. CIT ITA No. 16/2014 and submitted that Hon’ble High Court has held that unilateral incurring of AMP expenses does not constitute an international transaction and benefit to the AE if any is incidental only.
Ld. AR further submitted that Hon’ble Delhi High Court in a number of cases has held that advertisement expenditure should not be treated as capital expenditure incurred for creating intangible capital asset and therefore in this respect our attention was invited to a case law of CIT vs. Monto Motors Ltd. (2012) 206 Taxman 43 (Delhi). Ld. AR further invited our attention to Accounting Standard (AS)
26 on Accounting of Intangibles issued by the Institute of Chartered Accountants of India (ICAI) which suggest that cost of developing the brand can not be distinguished from general business development expenses, internally generated brand names cannot be recognized as an intangible. Ld. AR further submitted that there is a material difference in inbound segment of out bound as the assessee is required to incur substantial expenditure of advertisement and marketing to promote their outbound business whereas these expenses are incurred by foreign tour operator / travel agent in the inbound business and therefore the outbound advertisement expenditure is bound to be substantially more as compared to inbound advertisement expenditure and therefore benchmarking of AMP expenses incurred by assessee to promote outbound business vis a vis AMP expenses incurred by for comparables for promotion of their inbound business would be inappropriate. Further highlighting the difference between inbound and outbound [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels business of assessee Ld. AR submitted that in bound services provided by assessee can be classified as B2B market whereas services handed in outbound services can be classified as B2C and obviously the expenditure in B2C marketing will be much more because of various reasons. Inviting our attention to a decision of Delhi Bench of Tribunal in the case of Destination of the World vs. ACIT (ITA No. 5534/Del/2010). Ld. AR submitted that Hon’ble Tribunal held that there is a material difference between inbound and outbound services segments. In view of the above arguments the Ld AR submitted that it would be inappropriate to benchmark AMP expenses to sales ratio of the inbound segment for AMP expenses to sale ratio of outbound business. Ld. AR prayed that this issue can be sent back to AO to consider the same in accordance with law and in accordance with case law of Sony Ericson Mobile Services as decided by Hon’ble Delhi High Court.
The learned DR, on the other hand agreed to the proposition of learned AR regarding AMP issue and submitted that matter needs to be re-adjudicated by Assessing Officer. However, as regards the issue of addition on account of non deduction of TDS he, strongly argued that each year is a different year and invited our attention to para 17 of the Tribunal order relied upon by Ld. AR and submitted that in that years Ld. DR was unable to controvert any of the findings of Ld. CIT(A) whereas in present years he can demonstrate that the assessee was liable to deduct TDS and in this respect he invited our attention to the Hon’ble Delhi High Court order in the case of CIT vs. Havells India Ltd. and submitted that Hon’ble High Court has clearly held that assessee was liable to deduct TDS. He submitted that in [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels this case law the assessee had made payments to agents outside India without deduction of TDS and Hon’ble Delhi High Court has decided the issue in favour of revenue. He submitted that in order to constitute as to whether the income is deemed to accrue or arising in India the source of income has to be seen and not source of receipt is to be seen . The Ld. DR submitted that in this case the Hon’ble High Court had restored the issue to the file of AO for deciding afresh in view of applicability of Indo-US treaty. He submitted that Hon’ble Tribunal in earlier years had not gone into this aspect as Ld. DR had not represented the revenue’s case in this direction. Therefore he strongly argued that the issues of reimbursement and payments be restored to Assessing Officer. Further Ld. DR filed a copy of case law decided by Hon’ble Tribunal Chennai Bench in ITA No. 1810/Mds./2013 and submitted that the Hon’ble Tribunal has decided the issue of TDS and has held that tax has to be deducted u/s 40(a) (ia) irrespective of the fact as to whether the amount was paid as payable . Ld. DR submitted that the Tribunal has considered all judgments passed by Gujarat, Calcutta and Kerala High Courts in this respect.
In his rejoinder Ld. AR invited our attention to the case law of Havells India Ltd. relied upon Ld. DR and invited our attention to para 9 and submitted that payments made in that case were made for services within the meaning of section 9(i)(vii) of the Act and therefore Hon’ble court had rightly held the payments to be liable to tax deduction at source. Ld. AR invited our attention to provisions of section 9(i)(vii) and submitted that the income is deemed to accrue or arose only when the payments are made for managerial, technical or consultancy services and [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels Hon’ble Tribunal after analysing the various agreements entered into by assessee has arrived at a conclusion that these services were not in the nature of managerial, technical or consultancy and therefore the case law relied upon by Ld. DR is totally distinguishable from the facts and circumstances of the present cases. Regarding the reliance placed by Ld. AR on the case law of Chennai Tribunal Ld. AR submitted that he has not argued on these lines as the issue herein is not relating to as to whether TDS is applicable on of expenses paid or expenses payable. Therefore this case law is also of no help to revenue.
We have heard the parties and have gone through the material placed on record. The appeals were originally heard on 24.8.2015. However at the time of dictation it was felt that agreements entered into by assesee with overseas agents were not on record. The Hon’ble Tribunal vide its decision dated 19th December, 2014 had concluded the issue in favour of assessee after examining the terms and conditions of agreements with overseas agents and since the agreements were not found in the paper books therefore the cases were refixed for clarification and was finally heard on 3.9.2015. During rehearing the Ld. AR filed copies of agreements with various agents in the form of paper book and argued that similar terms and conditions are there in these years as were in the assessment year 2007-08 and 2008-09. However Ld. DR submitted that these agreements were not before the lower authorities and cannot be relied upon. Therefore these copies of agreement were not taken on record and were returned to the Ld. AR .
[Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels 9.1 We first take up assessee’s appeal in assessment year 2009-10 and assessment year 2010-11. Ground No. 1 in both years is general and do not require any adjudication. Therefore ground No. 1 in both years is dismissed. Ground No. 2 in both years is regarding addition on account of AMP expenses. We find that the AO has made the addition on account of transfer pricing in relation to expenses incurred by assessee in outbound business segment by comparing the expenses incurred by comparables in the inbound segment. We understand that two segments are materially different and require different level of expenditure for promotion of these business segments. Therefore we are of the firm view that this matter should be reconsidered by AO who would decide the issue afresh in accordance with law. In view of the above ground no. 2 in both years is allowed for statistical purposes.
9.2 As regards ground No. 3 in both years we find that Hon’ble Tribunal vide its order dated 19th December 2014 had decided the issue in favour of assessee after analysis of the agreement with overseas representatives and had arrived at a conclusion that the nature of services provided by these agents were not in the nature of managerial technical or consultancy services. In the present years the agreements entered into with agents were not on record and therefore without examination of these agreements the decision as to whether the services do not fall in managerial technical or consultancy category can not be arrived at. Therefore in view of substantial justice we are of the view that the AO should examine agreements to determine the nature of services provided by agents and if the nature of services as mentioned in the agreements is similar as in the years 2007-08 and [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels 2008-09 and the services are not in the nature of managerial technical or consultancy services then he should allow the same as the Hon’ble Delhi High Court has upheld the decision of Hon’ble Tribunal for assessment year 2007-08 and 2008- 09.
9.3 In view of the above Ground No. 3 in both years is allowed for statistical purposes.
Ground No. 4 and 5 in assessment year 2009-10 and ground No. 7 and 8 in assessment year 2010-2011 are against the levying of interest u/s 234B and initiating of penalty proceedings. These Grounds are consequential and premature respectively, therefore, these are dismissed.
10.1 As regards ground 4 in assessment year 2010-11 we find that AO had disallowed an amount of Rs. 13,52,224/- as advertisement & publicity charges paid to non-resident entities without tax deduction at source. The issue of advertisement and publicity charges will also be examined by AO afresh keeping in view the terms and conditions of the agreement of Advertisement and AO will examine the nature of services rendered by such payees. Therefore the issue of advertisement of publicly expenses is restored to A.O for re-adjudication. As regards amount paid amounting to Rs. 19,39,692/- representing AMC for computer software we find that the payment is clearly for provision of technical services and therefore the payments were liable for tax deduction at source, in view of the judgment of Hon’ble Delhi High Court in the case of Havells India 21 taxman.com. 476 and therefore the [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels addition to the extent of Rs. 19,39,692/- is confirmed. In view of the above ground No. 4 in assessment year 2010-11 is partly allowed for statistical purposes and is party dismissed.
11 Ground No. 5 and 6 raised by assessee in assessment year 2010-11 relates to its grievance by the action of the AO who had not allowed full credit of tax deducted at source therefore we direct AO to allow full credit of taxes deducted at source after examination of records. In view of the above ground No. 5 and 6 are allowed for statistical purposes.
11.1 In nutshell the appeal of the assessee for assessment year 2009-10 is allowed for statistical purposes whereas appeal of the assessee in assessment year 2010-11 is partly allowed for statistical purposes and partly dismissed.
11.2 Now coming to the revenue’s appeal. We first take up assessment year 2009-10. Ground No. 1 relates to deletion of addition of Rs. 5,16,542/- which the AO had made on account of excess depreciation on computer peripherals. We find that similar issue has been decided by Hon’ble Delhi High Court in the case of Rajdhani BSES. Moreover similar issue has been decided by Tribunal in Asst. Years 2007-08 & 2008-09 in the case of assessee itself which has been decided against the Revenue. Respectfully following the above ground No. 1 of revenue’s appeal is dismissed.
[Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels 11.3 In ground No. 2 the grievance of revenue is the action of DRP by which it has deleted the addition of Rs. 13,93,42,766/- made by AO u/s 40(a)(ia) on account of tour expenses without deduction of tax at source. We find that the expenses were incurred by agents of assessee who were situated outside India. Details of expenses incurred by assessee in various countries is detailed at page 20 of DRP’s order. We find that DRP has dealt the issue at para 6.4.3 to para 6.4.8 and has arrived at conclusion that assessee was not required to deduct tax on such payments. The findings of DRP are reproduced as under :-
“6.4.3 The taxpayer has made the impugned payments to the various entities situated in the countries listed above, for the purposes of hotel bookings, car bookings etc. The payments are stated to have been made directly to the hotel or tour agent etc. It cannot be said that foreign tour operators or hotels etc are having business connection in terms of the explanation 2 of section 9(1) of the Act. It clearly lays down that the income may be deemed to accrue or arise in India in case income is received, directly or indirectly from a: i. business connection in India, ii. property in India, iii. asset or source of income in India, iv. from transfer of capital asset situated in India Hon'ble Supreme Court in the matter of CIT vs. Aggarwal & Co. (R.D.) [56 ITR 20], has held that the definition of the expression "business connection" given in the Act is an inclusive one. The expression undoubtedly means some things more than "business". A business connection is not equivalent to carrying on of a business but involves a relation between a business carried on by a non- resident which yields profits or gains and some activity carried out in the taxable territories which contributes directly or indirectly to the earning of those profits or gains. It predicates an element of continuity between the [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels business of the non- resident and the activity in the taxable territories. A stray or isolated transaction is normally not to be regarded as a business connection. Business connection may take several forms. It may include carrying on a part of the main business or activity incidental to the main business of the non-resident through an agent, or it may merely be a relation between the business of the non- resident and the activity in the taxable territories which facilitates or assists the carrying on of that business. Further, certain parameters for calling the relationship as business connection, has been carved out, which are enumerated hereunder- a. A real and intimate relation must exist between the trading activities carried on outside India by a non-resident and the activities within India. b. Such relationship must contribute to the income of the non-resident. d. Some part of the activity must be carried out in India. e. Continuity of relationship must be there.
Form the details available on record in the draft assessment order or that produced before us, there is nothing to established that the foreign tour operator or hotels etc were having a person acting on their behalf for any of their activities provided in the definition of "business connection". Moreover, the amount remitted to a party an entity in a treaty country Is taxable in India, as per section 90(2) of the Act read with relevant treaties, only if such non- resident entity can be said to have a PE in India. As per Article 7 of treaties entered into by India with different countries, business income of a non-resident is taxable in India only if a Permanent Establishment (PE) is construed to be established in India. Further, the Article provides that only that part of the income can be taxed in India that can be reasonably attributable to the PE existing in India. Article 5 of the treaties defines the term Permanent Establishment and in the present case of the Taxpayer, no such PE can be construed to be present. Moreover, if a non-resident entity has a permanent establishment in India, but no service or sale is made through that permanent [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels establishment and the transactions are on a principal to principal basis, then also no taxable income arises . 6.4.8 In the light of the above, the Panel holds that the amounts paid by the taxpayer to various entities in different countries, whether with countries having DT AA or not, the particulars of which are given above, is not chargeable to tax under the domestic law as well as the DT AA. Accordingly , in the light of the discussion made about section 40(a)(i) in para 6.4.1 above, the Panel holds that the payments made by the taxpayer do not cover all the ingredients of section 40(a)(i) of the Act and therefore, the taxpayer was not liable to deduct tax at source. The action of the AO is accordingly, not upheld.”
11.4 In assessment year 2007-08 & 2008-09, the Hon’ble Tribunal vide its order dated 19.12.2014 had dismissed the appeals of Revenue on similar issues which have been upheld by the Hon’ble Delhi High Court in its order dated 10.08.2015. In view of the above respectfully following the above orders we do not find any infirmity in the order of the DRP. Therefore, Ground No.2 is dismissed.
11.5 Now coming to ground No. 3 we find that assessee had claimed an amount of Rs. 3,42,96,779/- on account of following expenses :-
S.No. Particulars Amount(rs.) 1. Travelling Expenses-Staff 72,21,402 2. Participation expenses 41,40,902 3. Overseas Representation 1,90,80,872 charges 4. Reimbursement of 38,53,603 expense to overseas Representatives Total 3,42,96,779 [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels 11.6 The DRP has held that the Travelling Expenses and Participation Expenses did not require tax deduction at source therefore, it deleted these two disallowances.
However, it confirmed the disallowance proposed by A.O on account of overseas representation charges reimbursement of expenses. As regards the issue of Travelling Expenses, Participation Expenses and Reimbursement of Expenses, we find that similar issue has been decided by Tribunal. In Asst. Year 2007-08 & 2008- 09 in favour of the assessee, which has been upheld by Hon,ble Delhi High Court.
The issue of overseas representation charges had also been decided by Hon’ble Tribunal in favour of assessee on the basis of analysis of agreements with agents.
However, in the present years in assessee’s appeals, in the absence of agreements with overseas agents, the issue of payment of overseas representation charges has been set aside to the office of A.O for examination of nature of services to be performed by agents. Therefore, the issue of overseas representation charges amounting of Rs.1,90,80,872/- was restored to the office of Assessing Officer who will re-adjudicate on the above after examination of nature of services of agents and the nature of services did not fell into any of the categories of managerial, technical on consultancy services he will allow the same or otherwise will deal with the same as per law.
11.7 We further find that the assessee vide Ground No.3 has also agitated against confirmation of disallowance by DRP to the extent of Rs,1,90,80,872/- which is part of the amount of Rs.3,42,96,779/- against which revenue has also filed appeal. This confusion seems to have arisen because of the fact that DRP had [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels confirmed the addition proposed by A.O on account of representation charges of reimbursement of charges whereas A.O in his final order had not made these two disallowances. Anyway, we have already set aside this issue to the office of Assessing Officer for re-adjudication and therefore ground raised by Revenue on account of deletion of representation charges has become infructuous and hence dismissed.
11.8 In view of the above ground No. 3 is also dismissed.
9 In nutshell the appeal of the revenue for the Asst. Year 2009-10 is dismissed.
Revenue’s appeal for the assessment year 2010-11
Ground No. 1 is regarding action of DRP by which it deleted addition of Rs. 10,47,14,264/- made by AO u/s 40(a)(i) of the Act. In fact the correct amount is Rs, 10,17,14,264/-. We find that A.O had disallowed the amount of Rs. 10,17,14,264/- claimed by assesses as tour expenses. Ld. DRP has held that amounts paid by assessee to various entities in different countries were transactions representing principle to principle basis and therefore no taxable income arose out of those expenses. Similar issue of Tour Expenses has been considered by Hon’ble Tribunal in its order dated 19.12.2014, which has been upheld by Hon’ble Delhi High Court vide its order dated 10.08.2015. Respectfully following the above, Ground No.1 is dismissed.
[Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels 12.1 In Ground No. 2 the revenue is aggrieved with the action of Ld. DRP by which it had reduced the amount of disallowance from Rs. 3,76,59,563/- to Rs. 1,23,01,374/-. The relevant finding of Ld. DRP are contained in para from 6.1 to 6.2.
We find that amount of Rs. 3,76,59,563/- consists of payments made by assessee under six heads namely travelling expenses (staff and Directors), participation expenses, Overseas representation charges, reimbursement of Expenses, Advertisement and Publicity of other charges. Out of these six heads of expenditure the Ld. DRP has deleted disallowance on account of heads falling under travelling expenses, participation expenses, and has upheld the addition on account of overseas representation charges and reimbursement of expenses. We further find that revenue has taken Ground No.2 against DRP action in reducing the disallowance from Rs.3,76,59,563/- to Rs.1,23,01,374/- which in fact is not correct as the disallowance confirmed by DRP is Rs. 2,53,58,189/- consisting of the following heads of expenditure.
Overseas Representation Charges Rs.1,90,21,944/- Reimbursement of Expenditure Rs.30,44,322/- Advertisement of Publicity Rs.13,52,224/- AMC for Computer Software Rs.19,39,692/- Total Rs. 2,53,58,159/- In view of the above the grievance of revenue is only to be extent of Rs.1,23,01,374/- which the DRP had deleted on account of the following expenses.
[Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels
Travelling Expenses (Staff & Directors) Rs.76,57,147/- Participation Expenses Rs.46,44,228/- Total Rs, 1,23,01,374/- The additions upheld by learned DRP amounting for all to Rs. 2,53,58,189/- has been challenged by Assessee in Ground Nos.3 & 4 which has already been adjudicated in the Assessee’s appeal and has been set aside to A.O for re- adjudication. Therefore, the grounds taken by revenue regarding deletion of Rs.2,53,58,159/- has become infructious and hence dismissed. As regards revenue’s grievance consisting of two expenses as detailed above, we find that the travelling expenses and participation expenses has been dealt by us in assessment year 2009- 10 whereby we had confirmed the action of DRP in deleting the same therefore, the expenses representing travelling expenses and participation expenses did not require deduction of tax at source and therefore deletion of addition to that extent is confirmed. In view of the above Ground No.2 of Revenue’s appeal is dismissed. In nutshell Revenue’s appeal for Asst. Year 2010-11 is dismissed.
12.2 In nutshell Revenue’s appeal for Asst. Year 2010-11 is dismissed.
The appeals of the assessee and that of Revenue are disposed off as above.
Order pronounced in the open court on 29th September 2015. sd/- sd/- (DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: the 29th September, 2015 [Type text] 2491/Del/2014, 1529/Del/2015 ITA Nos: 1186/Del/2014, 659/Del/2015 Le Passage to India Tours & Travels vs. DCIT DCIT vs. Le Passage to India Tours & Travels ‘veena’ Copy of the Order forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard File By order Dy. Registrar
Sl. Description Date No. 1. Date of dictation by the Author 24.8..2015 3.9.2015 2. Draft placed before the Dictating Member 25.8.2015 4.9.2015 3. Draft placed before the Second Member 4. Draft approved by the Second Member 5. Date of approved order comes to the Sr. PS 6. Date of pronouncement of order 7. Date of file sent to the Bench Clerk 8. Date on which file goes to the Head Clerk 9. Date of dispatch of order