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2019 (11) TMI 1074 - AT - Income TaxTDS u/s 194C OR 194I - short deduction of TDS - payment of the facility fees - HELD THAT:- In S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] where tax was deducted by the assessee, though under a bonafide wrong impression under wrong provisions, the provisions of section 40(a)(ia) could not be invoked and that if there was any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various tax deduction at source provisions, the assessee could be declared to be an assessee in default u/s 201 but no disallowance could be made invoking the provisions of section 40(a)(ia) of the Act. On appeal, the Hon’ble High Court held that no substantial question of law arose from the said order of the Tribunal - we delete the disallowance made by the AO u/s 40(a)(ia) and allow the 1st ground of appeal. TDS u/s 195 - Commission paid to foreign parties - HELD THAT:- In the case of GE India Technology Centre (P.) Ltd. [2010 (9) TMI 7 - SUPREME COURT] it is held that a person paying interest or any other sum to a non-resident is liable to deduct tax u/s 195 only if such sum is chargeable to tax in India and not otherwise. In the instant case, following the above decision we delete the disallowance made by the AO and allow the 2nd ground of appeal. TDS u/s 194C - labour charges payment - HELD THAT:- We find that the expenses disallowed by the AO are not debited to the P&L account. In fact these expenses are capitalized. As held in case of S.K. Terkriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] , if there was any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various tax deduction at source provisions, the assessee could be declared to be in default u/s 201 but no disallowance could be made invoking the provisions of section 40(a)(ia) of the Act. In view of the above position of law, we delete the disallowance. Disallowance of loss on sale of returned goods - HELD THAT:- The fact remains that during the AY 2010-11, the assessee had sold goods to the Karnataka Police in February 2010 for ₹ 192,95,306/-. However, the said consignment was rejected by the client vide letter dated 01.03.2010. As the assessee is following the mercantile system of accounting, the AO has rightly made a disallowance of ₹ 12,94,653/- on account of loss on sale of goods returned in AY 2010-11. Thus the 4th ground of appeal is dismissed. Disallowance of the foreign travelling expenses - Allowable revenue expenses - HELD THAT:- in the instant case, the assessee failed to file any evidence that it was due to Shri Shambhukumar S. Kasliwal’s visit to Switzerland along with his wife to finalize a deal for purchase of Spinning Machinery from M/s Klopman International. Further, we find that during the year under consideration the assessee had paid commission to foreign agents and none of them were in Switzerland but were based in UAE, Kuwait, Saudi Arabia and Lebanon. As the assessee failed to justify the business exigency of the foreign travel, the AO has rightly made a disallowance
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