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ITA 2491/DEL/2014

• Counselvise Citation: 249120114 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 06-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMINDRA KUMAR
• Keywords: Capital asset; Business income; Depreciation; Transfer pricing; International transaction; Permanent establishment; Initiation of penalty proceedings; Non-deduction of tax; Capital expenditure
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO: 2491/DEL/2014 & ITA NO. 1529/DEL/2015 ASSTT. YEARS 2009-10, 2010-11 LE PASSAGE TO INDIA TOUR S & TRAVELS VS. DCIT (P) LTD. CIRCLE 4 (1) HAUZ KHAS NEW DELHI NEW DELHI (PAN AAACL8370K) (APPELLANT) (RESPONDENT) ITA NO: 1186/DEL/2014 & ITA NO. 659/DEL/2015 ASSTT. YEARS 2009-10, 2010-11 DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS CIRCLE-15(2) (P) LTD. NEW DELHI. E-29, HAUZ KHAS NEW DELHI (PAN AAACL8370K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY VOHRA, SR. ADVOCATE SHRI NEERAJ JAIN, ADVOCATE MS. DEEPIKA AGARWAL, CA RESPONDENT BY : SHRI AMINDRA KUMAR, CIT (DR) DATE OF HEARING : 24.8.2015 DATE OF PRONOUNCEMENT : 29 .09.2015 [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 2 O R D E R PER BENCH THESE ARE CROSS APPEALS FILED BY THE ASSES SEE AND REVENUE AGAINST THE ORDER OF DRP DATED 26.12.2013 AND DATED 21.11.2014 FOR AS SESSMENT YEAR 2009-10 AND 2010-11 RESPECTIVELY. IN THE APPEAL FILED FOR ASSES SMENT YEAR 2009-10 THE ASSESSEE VIDE GROUND NO. 2 TO 2.6 HAS RAISED ITS GRIEVANCE W ITH 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 CHALLENGE D. IN GROUND NO. 3 THE ASSESSEE HAS RAISED ITS GRIEVANCE REGARDING UPHOLDING OF DIS ALLOWANCE OF OVERSEAS REPRESENTATION CHARGES AND REIMBURSEMENT OF EXPENSE S 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 DIS MISSED. 2. THE REVENUE IS AGGRIEVED ON THREE DELE TIONS MADE BY DRP. GROUND NO. 1 RELATES TO DELETION OF ADDITION OF RS. 5,16,542/- M ADE BY THE AO FOR EXCESS CLAIM OF DEPRECIATION MADE BY ASSESSEE ON COMPUTER PERIPHERA LS. [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 3 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 T HE 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, WHER EBY IT DELETED THE ADDITION OF RS. 3,42,96,779/- MADE BY AO U/S 40(A)(IA) ON ACCOU NT OF PAYMENT TO OVERSEAS REPRESENTATIVES WITHOUT DEDUCTION OF TAX AT SOURCE. 3. IN ASST. YEAR 2010-11 THE GROUNDS R AISED BY ASSESSEE VIDE GROUND NO. 2 TO 2.22 ARE SIMILAR AS IS GROUND NO. 2 IN ASSESSME NT YEAR 2009-10. SIMILARLY GROUND RAISED BY ASSESSEE VIDE GROUND NO. 3 TO 3.3 ARE SIM ILAR TO GROUND NO. 3 IN ASSESSMENT YEAR 2009-10 WITH THE DIFFERENCE THAT I N ASSESSMENT YEAR 2010-11 BESIDES THE ISSUE OF REPRESENTATION CHARGES THE IS SUE IS ALSO OF REIMBURSEMENT OF EXPENSES PAID TO OVERSEAS REPRESENTATIVES. VIDE GRO UND NO. 4 THE ASSESSEE IS AGGRIEVED WITH THE DISALLOWANCE OF ADVERTISEMENT AN D 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 PROCEEDI NGS WHICH ARE CONSEQUENTIAL AND PRE MATURE RESPECTIVELY AND THEREFORE THESE ARE DISMISS ED. GROUND NO.1 BEING GENERAL DO NOT REQUIRE ANY ADJUDICATION AND THEREFORE IS DI SMISSED. GROUND NO. 5 & 6 ARE REGARDING GRIEVANCE OF ASSESSEE WHEREBY ASSESSING O FFICER HAS NOT GIVEN FULL CREDIT FOR TAX DEDUCTION AT SOURCE. [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 4 4. THE REVENUE IN ASSESSMENT YEAR 2010-11 VIDE GROU ND NO. 1 IS AGGRIEVED WITH THE ACTION OF DRP BY WHICH IT HAD DELETED THE ADDIT IONS MADE BY AO U/S 40(A)(IA) OF THE ACT. VIDE GROUND NO.2, THE REVENUE IS AGREED WI TH 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. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF ORGANISING TOURS AND ARRANGEMENTS FOR FOREIGN TOURI STS 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 TR AVEL 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 ASSE SSEE 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 VARI OUS 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 FA CT THERE WERE ADDITIONS IN BOTH YEARS ON ACCOUNT OF TWO ISSUES OUT OF WHICH ONE REL ATES 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 O VERSEAS AGENTS ON ACCOUNT OF REIMBURSEMENT OF EXPENSES AND ON ACCOUNT OF PAYMENT OF REPRESENTATION CHARGES. LD. AR SUBMITTED THAT THE ADDITION ON ACCOUNT OF OV ERSEAS REPRESENTATIONS CHARGES [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 5 AND REIMBURSEMENT OF EXPENSES TO OVERSEAS REPRESENT ATIVES IS COVERED IN FAVOUR OF ASSESSEE BY ORDER OF HONBLE TRIBUNAL DATED 19 TH DECEMBER, 2014 IN THE CASE OF ASSESSEE ITSELF FOR ASSESSMENT YEARS 2007-08 AND 20 08-09. 6. LD. AR INVITED OUR ATTENTION TO PARA 12 ON WARDS OF TRIBUNAL ORDER AND SUBMITTED THAT HONBLE 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 A CT AND THEREFORE THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. LD. AR SUBMITTED THAT T HE ABOVE TRIBUNAL ORDER HAS BEEN UPHELD BY HONBLE DELHI HIGH COURT IN ITA NO. 489 AND 491/2015 VIDE ORDER DATED 10 TH AUGUST, 2015 AND IN THIS RESPECT FILED A COPY OF O RDER OF HONBLE DELHI HIGH COURT. LD. AR SUBMITTED THAT SINCE THE FACTS A ND CIRCUMSTANCES REMAINS SAME AND THEREFORE THE ADDITION CONFIRMED BY DRP IS A CO VERED ISSUE IN FAVOUR OF ASSESSEE. 6.1. AS REGARDS TRANSFER PRICING ADJUSTMENT LD. AR SUBMITTED THAT ASSESSEE HAD INCURRED CERTAIN EXPENDITURE ON ADVERTISEMENT MARKE TING AND SALE PROMOTION FOR INBOUND TRAVEL SERVICES AND FOR OUTBOUND TRAVEL SER VICES AND FOR WHICH THE AMP EXPENSES / SALE RATIO WAS 2.80% AND 3.6% RESPECTIVE LY AND THE CONSOLIDATED RATIO OF AMP EXPENSES TO SALES WERE ONLY 3.79%. LD. AR SUBMI TTED 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 COMPAR ABLES ENGAGED IN INBOUND [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 6 BUSINESS SEGMENT. LD. AR INVITED OUR ATTENTION TO T HE CASE LAW OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD. VS. CIT ITA NO. 16/2014 AND SUBMITTED THAT HONBLE HIGH COURT HAS HELD THAT UNILATERAL INCURRI NG OF AMP EXPENSES DOES NOT CONSTITUTE AN INTERNATIONAL TRANSACTION AND BENEFI T TO THE AE IF ANY IS INCIDENTAL ONLY. LD. AR FURTHER SUBMITTED THAT HONBLE DELHI HIGH CO URT IN A NUMBER OF CASES HAS HELD THAT ADVERTISEMENT EXPENDITURE SHOULD NOT BE T REATED 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. MON TO MOTORS LTD. (2012) 206 TAXMAN 43 (DELHI). LD. AR FURTHER INVITED OUR ATTE NTION TO ACCOUNTING STANDARD (AS) 26 ON ACCOUNTING OF INTANGIBLES ISSUED BY THE INSTI TUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI) WHICH SUGGEST THAT COST OF DEVELOPING THE BRAND CAN NOT BE DISTINGUISHED FROM GENERAL BUSINESS DEVELOPMENT EXP ENSES, INTERNALLY GENERATED BRAND NAMES CANNOT BE RECOGNIZED AS AN INTANGIBLE. LD. AR FURTHER SUBMITTED THAT THERE IS A MATERIAL DIFFERENCE IN INBOUND SEGMENT O F OUT BOUND AS THE ASSESSEE IS REQUIRED TO INCUR SUBSTANTIAL EXPENDITURE OF ADVERT ISEMENT 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 SUBSTANTIA LLY MORE AS COMPARED TO INBOUND ADVERTISEMENT EXPENDITURE AND THEREFORE BEN CHMARKING 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 DIFFERENC E BETWEEN INBOUND AND OUTBOUND [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 7 BUSINESS OF ASSESSEE LD. AR SUBMITTED THAT IN BOUND SERVICES PROVIDED BY ASSESSEE CAN BE CLASSIFIED AS B2B MARKET WHEREAS SERVICES HA NDED 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 ATTEN TION 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 HONBLE TRIB UNAL HELD THAT THERE IS A MATERIAL DIFFERENCE BETWEEN INBOUND AND OUTBOUND SERVICES S EGMENTS. IN VIEW OF THE ABOVE ARGUMENTS THE LD AR SUBMITTED THAT IT WOULD BE INAP PROPRIATE 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 CA N BE SENT BACK TO AO TO CONSIDER THE SAME IN ACCORDANCE WITH LAW AND IN ACCORDANCE W ITH CASE LAW OF SONY ERICSON MOBILE SERVICES AS DECIDED BY HONBLE DELHI HIGH CO URT. 7. 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 RELI ED 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 TH E ASSESSEE WAS LIABLE TO DEDUCT TDS AND IN THIS RESPECT HE INVITED OUR ATTENTION TO THE HONBLE DELHI HIGH COURT ORDER IN THE CASE OF CIT VS. HAVELLS INDIA LTD. AN D SUBMITTED THAT HONBLE HIGH COURT HAS CLEARLY HELD THAT ASSESSEE WAS LIABLE TO DEDUCT TDS. HE SUBMITTED THAT IN [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 8 THIS CASE LAW THE ASSESSEE HAD MADE PAYMENTS TO AG ENTS OUTSIDE INDIA WITHOUT DEDUCTION OF TDS AND HONBLE DELHI HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF REVENUE. HE SUBMITTED THAT IN ORDER TO CONSTITUTE A S 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 SUBMIT TED THAT IN THIS CASE THE HONBLE 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 HONBLE TRIBUNAL IN EARLIER YEARS HAD NOT GONE INTO THIS ASPECT AS LD. DR HAD NOT REP RESENTED THE REVENUES CASE IN THIS DIRECTION. THEREFORE HE STRONGLY ARGUED THAT T HE ISSUES OF REIMBURSEMENT AND PAYMENTS BE RESTORED TO ASSESSING OFFICER. FURTH ER LD. DR FILED A COPY OF CASE LAW DECIDED BY HONBLE TRIBUNAL CHENNAI BENCH IN ITA NO . 1810/MDS./2013 AND SUBMITTED THAT THE HONBLE 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 KERA LA HIGH COURTS IN THIS RESPECT. 8. IN HIS REJOINDER LD. AR INVITED OUR ATTENTION TO THE CASE LAW OF HAVELLS INDIA LTD. RELIED UPON LD. DR AND INVITED OUR ATTENTION T O PARA 9 AND SUBMITTED THAT PAYMENTS MADE IN THAT CASE WERE MADE FOR SERVICES W ITHIN THE MEANING OF SECTION 9(I)(VII) OF THE ACT AND THEREFORE HONBLE COURT H AD RIGHTLY HELD THE PAYMENTS TO BE LIABLE TO TAX DEDUCTION AT SOURCE. LD. AR INVITED O UR 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, TECHNICA L OR CONSULTANCY SERVICES AND [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 9 HONBLE TRIBUNAL AFTER ANALYSING THE VARIOUS AGREEM ENTS ENTERED INTO BY ASSESSEE HAS ARRIVED AT A CONCLUSION THAT THESE SERVICES WER E 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 CHENNA I TRIBUNAL LD. AR SUBMITTED THAT HE HAS NOT ARGUED ON THESE LINES AS THE ISSUE HEREI N IS NOT RELATING TO AS TO WHETHER TDS IS APPLICABLE ON OF EXPENSES PAID OR EXPENSES P AYABLE. THEREFORE THIS CASE LAW IS ALSO OF NO HELP TO REVENUE. 9. WE HAVE HEARD THE PARTIES AND HAVE GONE THR OUGH 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 HONBLE TRIBUNAL VIDE ITS D ECISION DATED 19 TH DECEMBER, 2014 HAD CONCLUDED THE ISSUE IN FAVOUR OF ASSESSEE AFTER EXAMINING THE TERMS AND CONDITIONS OF AGREEMENTS WITH OVERSEAS AGENTS AND S INCE 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 A RGUED 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 AGREEM ENTS WERE NOT BEFORE THE LOWER AUTHORITIES AND CANNOT BE RELIED UPON. THEREF ORE THESE COPIES OF AGREEMENT WERE NOT TAKEN ON RECORD AND WERE RETURNED TO THE L D. AR . [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 10 9.1 WE FIRST TAKE UP ASSESSEES APPEAL IN ASSESS MENT 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 YE ARS IS DISMISSED. GROUND NO. 2 IN BOTH YEARS IS REGARDING ADDITION ON ACCOUNT OF A MP EXPENSES. WE FIND THAT THE AO HAS MADE THE ADDITION ON ACCOUNT OF TRANSFER PRICIN G IN RELATION TO EXPENSES INCURRED BY ASSESSEE IN OUTBOUND BUSINESS SEGMENT BY COMPARI NG THE EXPENSES INCURRED BY COMPARABLES IN THE INBOUND SEGMENT. WE UNDERSTAND T HAT TWO SEGMENTS ARE MATERIALLY DIFFERENT AND REQUIRE DIFFERENT LEVEL OF EXPENDITURE FOR PROMOTION OF THESE BUSINESS SEGMENTS. THEREFORE WE ARE OF THE FIRM VIE W THAT THIS MATTER SHOULD BE RECONSIDERED BY AO WHO WOULD DECIDE THE ISSUE AFRES H IN ACCORDANCE WITH LAW. IN VIEW OF THE ABOVE GROUND NO. 2 IN BOTH YEARS IS ALL OWED FOR STATISTICAL PURPOSES. 9.2 AS REGARDS GROUND NO. 3 IN BOTH YEARS WE F IND THAT HONBLE TRIBUNAL VIDE ITS ORDER DATED 19 TH DECEMBER 2014 HAD DECIDED THE ISSUE IN FAVOUR OF A SSESSEE AFTER ANALYSIS OF THE AGREEMENT WITH OVERSEAS REPRESENTAT IVES 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 SERVI CES. IN THE PRESENT YEARS THE AGREEMENTS ENTERED INTO WITH AGENTS WERE NOT ON REC ORD 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 PROV IDED BY AGENTS AND IF THE NATURE OF SERVICES AS MENTIONED IN THE AGREEMENTS IS SIMIL AR AS IN THE YEARS 2007-08 AND [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 11 2008-09 AND THE SERVICES ARE NOT IN THE NATURE OF M ANAGERIAL TECHNICAL OR CONSULTANCY SERVICES THEN HE SHOULD ALLOW THE SAME AS THE HONBLE DELHI HIGH COURT HAS UPHELD THE DECISION OF HONBLE TRIBUNAL FOR ASS ESSMENT YEAR 2007-08 AND 2008- 09. 9.3 IN VIEW OF THE ABOVE GROUND NO. 3 IN BOTH YEARS I S ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO. 4 AND 5 IN ASSESSMENT YEAR 2009-10 AND GROUND NO. 7 AND 8 IN ASSESSMENT YEAR 2010-2011 ARE AGAINST THE LEVYIN G OF INTEREST U/S 234B AND INITIATING OF PENALTY PROCEEDINGS. THESE GROUNDS AR E CONSEQUENTIAL AND PREMATURE RESPECTIVELY, THEREFORE, THESE ARE DISMISSED. 10.1 AS REGARDS GROUND 4 IN ASSESSMENT YEAR 2 010-11 WE FIND THAT AO HAD DISALLOWED AN AMOUNT OF RS. 13,52,224/- AS ADVERTIS EMENT & PUBLICITY CHARGES PAID TO NON-RESIDENT ENTITIES WITHOUT TAX DEDUCTION AT S OURCE. THE ISSUE OF ADVERTISEMENT AND PUBLICITY CHARGES WILL ALSO BE EXAMINED BY AO A FRESH KEEPING IN VIEW THE TERMS AND CONDITIONS OF THE AGREEMENT OF ADVERTISEMENT AN D AO WILL EXAMINE THE NATURE OF SERVICES RENDERED BY SUCH PAYEES. THEREFORE THE ISS UE OF ADVERTISEMENT OF PUBLICLY EXPENSES IS RESTORED TO A.O FOR RE-ADJUDICATION. A S REGARDS AMOUNT PAID AMOUNTING TO RS. 19,39,692/- REPRESENTING AMC FOR COMPUTER SO FTWARE WE FIND THAT THE PAYMENT IS CLEARLY FOR PROVISION OF TECHNICAL SERVI CES AND THEREFORE THE PAYMENTS WERE LIABLE FOR TAX DEDUCTION AT SOURCE, IN VIEW OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF HAVELLS INDIA 21 TAXMAN. COM. 476 AND THEREFORE THE [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 12 ADDITION TO THE EXTENT OF RS. 19,39,692/- IS CONFIR MED. 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 NO T 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 TH E 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 REVENUES APPEAL. WE FIR ST TAKE UP ASSESSMENT YEAR 2009-10. GROUND NO. 1 RELATES TO DELETION OF ADDIT ION OF RS. 5,16,542/- WHICH THE AO HAD MADE ON ACCOUNT OF EXCESS DEPRECIATION ON CO MPUTER PERIPHERALS. WE FIND THAT SIMILAR ISSUE HAS BEEN DECIDED BY HONBLE DELH I HIGH COURT IN THE CASE OF RAJDHANI BSES. MOREOVER SIMILAR ISSUE HAS BEEN DECI DED BY TRIBUNAL IN ASST. YEARS 2007-08 & 2008-09 IN THE CASE OF ASSESSEE ITSELF WH ICH HAS BEEN DECIDED AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE ABOVE GROUND N O. 1 OF REVENUES APPEAL IS DISMISSED. [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 13 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 OU TSIDE INDIA. DETAILS OF EXPENSES INCURRED BY ASSESSEE IN VARIOUS COUNTRIES IS DETAIL ED AT PAGE 20 OF DRPS 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 T O THE VARIOUS ENTITIES SITUATED IN THE COUNTRIES LISTED ABOVE, FOR THE PURP OSES OF HOTEL BOOKINGS, CAR BOOKINGS ETC. THE PAYMENTS ARE STATED TO HAVE BEEN M ADE DIRECTLY TO THE HOTEL OR TOUR AGENT ETC. IT CANNOT BE SAID THAT FOREIGN TOU R OPERATORS OR HOTELS ETC ARE HAVING BUSINESS CONNECTION IN TERMS OF THE EXPLANATI ON 2 OF SECTION 9(1) OF THE ACT. IT CLEARLY LAYS DOWN THAT THE INCOME MAY BE DEE MED TO ACCRUE OR ARISE IN INDIA IN CASE INCOME IS RECEIVED, DIRECTLY OR INDIRECT LY 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. AGGARW AL & 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 UNDOU BTEDLY MEANS SOME THINGS MORE THAN 'BUSINESS'. A BUSINESS CONNECTION IS NOT E QUIVALENT TO CARRYING ON OF A BUSINESS BUT INVOLVES A RELATION BETWEEN A BUSINES S CARRIED ON BY A NON- RESIDENT WHICH YIELDS PROFITS OR GAINS AND SOME ACTIV ITY CARRIED OUT IN THE TAXABLE TERRITORIES WHICH CONTRIBUTES DIRECTLY OR INDIRECT LY TO THE EARNING OF THOSE PROFITS OR GAINS. IT PREDICATES AN ELEMENT OF CO NTINUITY BETWEEN THE [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 14 BUSINESS OF THE NON- RESIDENT AND THE ACTIVITY IN TH E TAXABLE TERRITORIES. A STRAY OR ISOLATED TRANSACTION IS NORMALLY NOT TO BE REGARDED AS A BUSINESS CONNECTION. BUSINESS CONNECTION MAY TAKE SEVERAL FORM S. IT MAY INCLUDE CARRYING ON A PART OF THE MAIN BUSINESS OR ACTIVITY INC IDENTAL 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 AC TIVITY IN THE TAXABLE TERRITORIES WHICH FACILITATES OR ASSISTS THE CARRYING ON OF THAT BUSINESS. FURTHER, CERTAIN PARAMETERS FOR CALLING THE RELATIONSHIP AS BUSIN ESS CONNECTION, HAS BEEN CARVED OUT, WHICH ARE ENUMERATED HEREUNDER- A. A REAL AND INTIMATE RELATION MUST EXIST BETWEEN TH E TRADING ACTIVITIES CARRIED ON OUTSIDE INDIA BY A NON-RESIDENT AND THE ACT IVITIES 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 IN DIA. E. CONTINUITY OF RELATIONSHIP MUST BE THERE. FORM THE DETAILS AVAILABLE ON RECORD IN THE DRAFT ASSES SMENT ORDER OR THAT PRODUCED BEFORE US, THERE IS NOTHING TO ESTABLISHED TH AT THE FOREIGN TOUR OPERATOR OR HOTELS ETC WERE HAVING A PERSON ACTING ON T HEIR BEHALF FOR ANY OF THEIR ACTIVITIES PROVIDED IN THE DEFINITION OF 'BUSI NESS 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 REA D WITH RELEVANT TREATIES, ONLY IF SUCH NON- RESIDENT ENTITY CAN BE SAID TO HAV E A PE IN INDIA. AS PER ARTICLE 7 OF TREATIES ENTERED INTO BY INDIA WITH DIFFERENT COU NTRIES, BUSINESS INCOME OF A NON-RESIDENT IS TAXABLE IN INDIA ONLY IF A PERMANEN T ESTABLISHMENT (PE) IS CONSTRUED TO BE ESTABLISHED IN INDIA. FURTHER, THE ART ICLE 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 D EFINES THE TERM PERMANENT ESTABLISHMENT AND IN THE PRESENT CASE OF THE TAXPAYE R, NO SUCH PE CAN BE CONSTRUED TO BE PRESENT. MOREOVER, IF A NON-RESIDENT EN TITY HAS A PERMANENT ESTABLISHMENT IN INDIA, BUT NO SERVICE OR SALE IS MAD E THROUGH THAT PERMANENT [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 15 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 TH AT THE AMOUNTS PAID BY THE TAXPAYER TO VARIOUS ENTITIES IN DIFFERENT COUNTRIES, WH ETHER 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 T HE 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 D O NOT COVER ALL THE INGREDIENTS OF SECTION 40(A)(I) OF THE ACT AND THEREF ORE, 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, TH E HONBLE TRIBUNAL VIDE ITS ORDER DATED 19.12.2014 HAD DISMISSED THE APPEALS OF REVEN UE ON SIMILAR ISSUES WHICH HAVE BEEN UPHELD BY THE HONBLE 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, GROUN D NO.2 IS DISMISSED. 11.5 NOW COMING TO GROUND NO. 3 WE FIND THAT A SSESSEE HAD CLAIMED AN AMOUNT OF RS. 3,42,96,779/- ON ACCOUNT OF FOLLOWING EXPEN SES :- S.NO. PARTICULARS AMOUNT(RS.) 1. TRAVELLING EXPENSES - STAFF 72,21,402 2. PARTICIPATION EXPENSES 41,40,902 3. OVERSEAS REPRESENTATION CHARGES 1,90,80,872 4. REIMBURSEMENT OF EXPENSE TO OVERSEAS REPRESENTATIVES 38,53,603 TOTAL 3,42,96,779 [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 16 11.6 THE DRP HAS HELD THAT THE TRAVELLING EX PENSES 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. A S REGARDS THE ISSUE OF TRAVELLING EXPENSES, PARTICIPATION EXPENSES AND REI MBURSEMENT OF EXPENSES, WE FIND THAT SIMILAR ISSUE HAS BEEN DECIDED BY TRIBUNA L. 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 AL SO BEEN DECIDED BY HONBLE TRIBUNAL IN FAVOUR OF ASSESSEE ON THE BASIS OF ANAL YSIS OF AGREEMENTS WITH AGENTS. HOWEVER, IN THE PRESENT YEARS IN ASSESSEES APPEALS , IN THE ABSENCE OF AGREEMENTS WITH OVERSEAS AGENTS, THE ISSUE OF PAYMENT OF OVERS EAS 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 OVERSE AS REPRESENTATION CHARGES AMOUNTING OF RS.1,90,80,872/- WAS RESTORED TO THE O FFICE OF ASSESSING OFFICER WHO WILL RE-ADJUDICATE ON THE ABOVE AFTER EXAMINATION O F 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 O THERWISE WILL DEAL WITH THE SAME AS PER LAW. 11.7 WE FURTHER FIND THAT THE ASSESSEE VIDE GR OUND 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 W HICH REVENUE HAS ALSO FILED APPEAL. THIS CONFUSION SEEMS TO HAVE ARISEN BECAUSE OF THE FACT THAT DRP HAD [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 17 CONFIRMED THE ADDITION PROPOSED BY A.O ON ACCOUNT O F REPRESENTATION CHARGES OF REIMBURSEMENT OF CHARGES WHEREAS A.O IN HIS FINAL O RDER HAD NOT MADE THESE TWO DISALLOWANCES. ANYWAY, WE HAVE ALREADY SET ASIDE TH IS ISSUE TO THE OFFICE OF ASSESSING OFFICER FOR RE-ADJUDICATION AND THEREFORE GROUND RAISED BY REVENUE ON ACCOUNT OF DELETION OF REPRESENTATION CHARGES HAS B ECOME INFRUCTUOUS AND HENCE DISMISSED. 11.8 IN VIEW OF THE ABOVE GROUND NO. 3 IS ALSO DISMISSED. 11. 9 IN NUTSHELL THE APPEAL OF THE REVENUE FOR THE ASST. YEAR 2009-10 IS DISMISSED. REVENUES APPEAL FOR THE ASSESSMENT YEAR 2010-11 12. GROUND NO. 1 IS REGARDING ACTION OF DRP B Y 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 H ELD THAT AMOUNTS PAID BY ASSESSEE TO VARIOUS ENTITIES IN DIFFERENT COUNTRIES WERE TRANSACTIONS REPRESENTING PRINCIPLE TO PRINCIPLE BASIS AND THEREFORE NO TAXAB LE INCOME AROSE OUT OF THOSE EXPENSES. SIMILAR ISSUE OF TOUR EXPENSES HAS BEEN CONSIDERED BY HONBLE TRIBUNAL IN ITS ORDER DATED 19.12.2014, WHICH HAS BEEN UPHE LD BY HONBLE DELHI HIGH COURT VIDE ITS ORDER DATED 10.08.2015. RESPECTFULLY FOLLO WING THE ABOVE, GROUND NO.1 IS DISMISSED. [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 18 12.1 IN GROUND NO. 2 THE REVENUE IS AGGRIEVED WITH THE A CTION 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 O F PAYMENTS MADE BY ASSESSEE UNDER SIX HEADS NAMELY TRAVELLING EXPENSES (STAFF A ND DIRECTORS), PARTICIPATION EXPENSES, OVERSEAS REPRESENTATION CHARGES, REIMBURS EMENT OF EXPENSES, ADVERTISEMENT AND PUBLICITY OF OTHER CHARGES. OUT O F THESE SIX HEADS OF EXPENDITURE THE LD. DRP HAS DELETED DISALLOWANCE ON ACCOUNT OF HEADS FALLING UNDER TRAVELLING EXPENSES, PARTICIPATION EXPENSES, AND HAS UPHELD TH E ADDITION ON ACCOUNT OF OVERSEAS REPRESENTATION CHARGES AND REIMBURSEMENT O F EXPENSES. WE FURTHER FIND THAT REVENUE HAS TAKEN GROUND NO.2 AGAINST DRP ACTI ON 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 ON LY TO BE EXTENT OF RS.1,23,01,374/- WHICH THE DRP HAD DELETED ON ACCOU NT OF THE FOLLOWING EXPENSES. [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 19 TRAVELLING EXPENSES (STAFF & DIRECTORS) RS.76,57,14 7/- PARTICIPATION EXPENSES RS.46,44,228/- TOTAL RS, 1,23,01,374/- THE ADDITIONS UPHELD BY LEARNED DRP AMOUNTING FOR A LL TO RS. 2,53,58,189/- HAS BEEN CHALLENGED BY ASSESSEE IN GROUND NOS.3 & 4 WHI CH HAS ALREADY BEEN ADJUDICATED IN THE ASSESSEES APPEAL AND HAS BEEN S ET ASIDE TO A.O FOR RE- ADJUDICATION. THEREFORE, THE GROUNDS TAKEN BY REVEN UE REGARDING DELETION OF RS.2,53,58,159/- HAS BECOME INFRUCTIOUS AND HENCE D ISMISSED. AS REGARDS REVENUES GRIEVANCE CONSISTING OF TWO EXPENSES AS DETAILED AB OVE, 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 DE LETING THE SAME THEREFORE, THE EXPENSES REPRESENTING TRAVELLING EXPENSES AND PARTI CIPATION EXPENSES DID NOT REQUIRE DEDUCTION OF TAX AT SOURCE AND THEREFORE DELETION O F ADDITION TO THAT EXTENT IS CONFIRMED. IN VIEW OF THE ABOVE GROUND NO.2 OF REVE NUES APPEAL IS DISMISSED. IN NUTSHELL REVENUES APPEAL FOR ASST. YEAR 2010-11 IS DISMISSED. 12.2 IN NUTSHELL REVENUES APPEAL FOR ASST. YEAR 20 10-11 IS DISMISSED. 13. THE APPEALS OF THE ASSESSEE AND THAT OF REVE NUE ARE DISPOSED OFF AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER 2015. SD/- SD/- (DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: THE 29 TH SEPTEMBER, 2015 [TYPE TEXT] ITA NOS: 2491/D EL/2014, 1529/DEL/2015 ITA NOS: 1186/DEL/20 14, 659/DEL/2015 LE PASSAGE TO INDIA TOURS & TR AVELS VS. DCIT DCIT VS. LE PASSAGE TO INDIA TOURS & TRAVELS 20 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. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 24.8..2015 3.9.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 25.8.2 015 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