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2014 (10) TMI 650 - AT - Income TaxAdministrative and collection charges disallowed u/s 14A – Held that:- The AO was of the view that the assessee has made investment of ₹ 21,14,07,850/- and the assessee has paid interest on borrowed funds of ₹ 40,10,861 – the AO as well as CIT(A) could not pinpoint any error in the computation of disallowance made by the assessee of ₹ 2,00,000/- in earning tax free dividend income - disallowance of ₹ 6,22,228/- could not have been sustained CIT(A) – relying upon CIT vs. Consolidated Photo & Finvest Ltd [2012 (7) TMI 312 - DELHI HIGH COURT] – thus, the order of the CIT(A) is to be set aside – Decided in favour of assessee. Restriction of Travelling expenses – Held that:- The AO made a disallowance of 50% of directors' travelling expenses to the income of the assessee on the ground that the assessee had not justified the reasons for incurring of the expenses which were more than five times of expenses incurred on other employees and the assessee has not produce vouchers in support of its claim - the estimated disallowance sustained by the CIT(A) - it is seen that the fact that the travel was undertaken entirely for business purposes has not been established – the order of the CIT(A) is upheld – Decided against assessee. Addition u/s 40(a)(ia) – Effluent treatment charges paid by assessee - Held that:- CIT(A) rightly was of the view that the decision in Sing Killing Vs. ITO [2002 (3) TMI 39 - GAUHATI High Court] is to be followed - TDS provisions were not applicable on services rendered by the attendant association to members - the contribution made by the assessee to its association Vapi Waste Effluent Management Company as a member cannot be classified as payment for contractual services as covered u/s. 194C of the Act – revenue could not bring any material on record to show that the payments were covered under the provisions of section 194C of the Act – thus, the order of the CIT(A) is upheld – Decided against revenue. Overseas freight expenditure – Held that:- CIT(A) rightly was of the view that the decision in ITO vs. Freight Systems India Private Ltd. [2005 (10) TMI 229 - ITAT DELHI-F] is to be followed - demurrage charge or handling charge or any other amounts of similar nature are treated at par with carriage freight payable to the ship owner or charter - amounts in the nature of demurrage etc. which may not end up being paid to non-residents are treated as amounts falling within special provisions of section 172 - This has been clarified by CBDT in Circular No. 723 of 1995 where such amounts have been taken outside the purview of the section 192C - where payments are made to shipping agent of non-resident owner or chartership at a port in India, provisions of section 172 will be applicable because the agent steps into the shoes of the owner - These charges are not covered under the provisions of law and no deduction of tax is called for u/s. 194C of the Act – revenue could not point out any specific error in the order of the CIT(A) – thus, the order of the CIT(A) is upheld – Decided against revenue.
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