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| The Tax Publishers2021 TaxPub(DT) 0629 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
Where running and maintenance expenses of assessee's foreign office were duly supported by documentary evidences and that genuineness of such expenses was not doubted by AO; the disallowance made by the AO in respect of such expenses was liable to be deleted.
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Business expenditure - Allowability - Running and maintenance expenses of foreign office -
Assessee-company claimed running and maintenance expenses of its foreign office, which were disallowed by AO. Assessee submitted that the said expenses were in the nature of payments made to its foreign representative 'D', who was looking after the interest of its foreign office. It was further submitted that 'D' was performing functions relating to sales promotions, procuring orders, providing assistance in logistic issues, assistance in collection of payments and advising, etc. It was further submitted that all the payments made to 'D' were made in foreign currency as per the norms of RBI. Held: AO did not doubt the genuineness of running and maintenance expenses of foreign office and also the said expenditure was duly supported by documentary evidences like vouchers, bank advices, and correspondences. Further, AO disallowed the said expenditure on the ground that the same was not allowable as per the provisions of the Act. How and why such expenditure was not allowable, had not been specified by the AO. Further, such expenditure had been duly disclosed in the audited financial statements and no fresh material on the issue had been brought on record by the AO. Therefore, the disallowance made in respect of running and maintenance expenses of foreign office was deleted.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2005-06
INCOME TAX ACT, 1961
Section 37(1)
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