Allowing the appeal of the assessee the Court held that the subsidiaries in foreign country were exclusive companies, which dealt only with products of assessee holding company and thus, expenditure had been incurred for promotion of business of assessee holding company  and the  assessee had been able to produce their annual report along with accounts prepared in accordance with AS-18 and also proved that there was a gradual increase in sales compared to early years by subsidiary companies in foreign country. Further, bona fides and genuineness of expenses incurred by assessee towards foreign travel were never in doubt before lower authorities. Court held that  expenditure incurred by assessee in nature of legal and professional fees for various services in connection with acquisition of a french company towards expansion of assessee’s business in Europe, incurred wholly and exclusively in connection with business would be allowable. Court also held that expenditure incurred expenditure for replacement of part of machine and whole of existing machine had not been replaced, said expenditure being revenue in nature would be allowable. (AY. 2010-11)