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2019 (1) TMI 876 - AT - Income TaxTDS u/s 195 - Disallowing assessee’s export commission payments on account of non-deduction of TDS thereby invoking sec. 40(a)(i) - Held that:- We uphold well reasoning findings of the learned CIT(A) that the commission payments made to the non resident agents did not have any taxability in India, even under the provisions of the domestic law i.e. Section 9. Once we come to the conclusion that the income embedded in these payments did not have any tax implications in India, no fault can be found in not deducting tax at source from these payments or, for that purpose, even not approaching the Assessing Officer for order under section 195. The assessee, for the detailed reasons set our above, did not have tax withholding liability from these payments. As held in the case of GE India Technology Centre Pvt Ltd Vs CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA], payer is bound to withhold tax from the foreign remittance only if the sum paid is assessable to tax in India. The assessee cannot, therefore, be faulted for not approaching the Assessing Officer under section 195 either. As regards the withdrawal of the CBDT circular holding that the commission payments to non resident agents are not taxable in India, nothing really turns on the circular, as de hors the aforesaid circular, we have adjudicated upon the taxability of the commission agent's income in India in terms of the provisions of the Income Tax Act as also the relevant tax treaty provisions. Addition u/s 14A - Held that:- CIT(A) has relied upon as a catena of case law in restricting the impugned disallowance to the extent of exempt income only. In Joint Investments Pvt. Ltd. vs. CIT (2015 (3) TMI 155 - DELHI HIGH COURT) has already settled the issue in assessee’s favour that such disallowance cannot exceed the relevant corresponding exempt income figure. We therefore reject Revenue’s instant third substantive ground as well for this precise alone. Disallowing assessee’s provision for liquidated damaged - Held that:- Revenue’s grievance that assessee’s liquidated damages are in the nature of penal liability not allowable as expenditure incurred wholly and exclusively for the purpose of its business. She fails to dispute the clinching fact the impugned liquidated damages are in the nature of contractual liability only than arising from violation of any penal provision. The assessee had made the impugned provision as per its contractual liability on account of non compliance / non-fulfilment of its business obligations to only its customer parties. We therefore find no merit in Revenue’s instant last substantive ground. Long Term Capital Gains addition in respect of sale of its land - Held that:- Assessee had initially declared cost of acquisition to be @ ₹40.1 per square yard fallowed by its revised return claiming the very value @ ₹60/- per square yard based on a registered valuer’s report. The CIT(A) has admittedly gone by its former valuation. He has applied estoppel in principle other ways. We find no merit to concur with the CIT(A)’s above stated reasoning. More particularly in view of the fact that a registered valuer had duly supported assessee’s case in enhancing the cost of acquisition from ₹40/- per square yard to ₹ 60/- per square yard. We take into account all these peculiarities involved in this case to apply thumb rule to estimate assessee’s cost of acquisition to be ₹48/- per square yard in the given facts and circumstances. It is made clear that we have invoked thumb rule to terminate the instant lis at this stage itself than sending it for a long drawn process of valuation. We further direct that our instant estimation shall not be treated as a precedent in any other case. The assessee’s former substantive ground in its cross objection is partly accepted in above terms.
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