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2023 (8) TMI 873 - ITAT DELHIDisallowance u/s 14A - assessee submitted that there has not been any exempt income during the year - HELD THAT:- Since assessee has not earned any exempt income in the year under consideration. Therefore, the addition made u/s 14A of the Act is directed to be deleted. Disallowance of staff welfare expenses - assessee failed to prove the expenses incurred for business purposes - Grievance of the Revenue is that Ld.CIT(A) deleted part of the addition and gave substantial relief to the assessee - HELD THAT:- CIT(A) has considered the material on record that goes to prove that part of the expenditure that has been disallowance by the AO was infact incurred for the purposes of business of the assessee company. This finding on facts is not contradicted by the Revenue by placing any adverse material on record. Therefore, we do not see any reason to interfere in the findings of Ld.CIT(A). Moreover, the disallowance has been made purely on estimation basis - AO has not given any basis as to why only 20% of such expenditure is disallowed.Thus there has to be some basis for rejection of claim by the AO. The AO should have pointed out as to why out of total expenditure, 20% is not incurred for business purpose. In the absence of specific finding, action of AO for disallowance of expenditure would not be justified. Disallowance of service fee u/s 37 (1) - HELD THAT:- CIT(A) has followed the decision of the Tribunal rendered in assessee’s own case [2016 (4) TMI 1447 - ITAT DELHI] deleting addition. TDS u/s 195 - Non-deduction of TDS u/s 40(a)(i) - HELD THAT:- From the above findings of Ld.CIT(A), it is clear that the issue related to deduction of tax has been examined in earlier years wherein held appellant is not the PE of Mitsui& Co. Ltd (Japan), hence no question of attribution of any profit of Mitsui& Co. Ltd (Japan) to the appellant company. Accordingly, there is no question of deduction of tax on the same. In view of the binding precedent, we do not see any merit in the grounds of appeal. Disallowance of staff welfare expenses - HELD THAT:- From the finding of Ld.CIT(A), it is clear that he did not advert to other expenses. He merely affirmed the action of AO without pointing out as to how the remaining expenses are not for business purpose. It is well settled that the AO should not resort to adhoc disallowance. If the expenditure is not incurred for business purpose, there has to be a specific finding in this regard unless expenditure for personal use and business purpose are mixed and cannot be segregated. In the case in hand, this is not the case, we therefore, direct the AO to delete the impugned addition. The ground raised by the assessee is allowed.
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