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2024 (2) TMI 784 - AT - Income TaxTDS u/s 195 - Sales commission paid to foreign company - non deduction of TDS - addition u/s 40(a)(i) - case made by the assessee is this that since the services rendered to the appellant by the said foreign company have been held not falling within the ambit of FTS or under Article 12 of the DTAA, the appellant is also not liable to deduct TDS on the payment so made - HELD THAT:- The issue is squarely covered in the case of M/s. Manthan System Inc. [2022 (9) TMI 1555 - ITAT BANGALORE] as held since it has already been decided by the Coordinate Bench that the services rendered to the assessee by the said Manthan Systems Inc. is not falling within the ambit of FTS or under Article 12 of the treaty, the assessee is not liable to deduct TDS on the payment made to the MSI. We find no ambiguity in the order passed by the Ld.CIT(A) in holding that there is no liability to deduct TDS and accordingly, deletion of addition made to the assessee’s income in respect of sales commission under section 40(a)(i) is found to be just and proper so as to warrant interference - Decided in favour of assessee. Addition in respect of ESOP expenses - allowable revenue expenses or not? - HELD THAT:- The issue is squarely covered by the judgment of Hon’ble Karnataka High Court in case of CIT, LTU vs. Biocon Ltd [2020 (11) TMI 779 - KARNATAKA HIGH COURT] as held incurring of the expenditure by the assessee entitles him for deduction under Section 37(1) of the Act subject to fulfillment of the condition. The deduction of discount on ESOP over the vesting period is in accordance with the accounting in the books of accounts, which has been prepared in accordance with Securities And Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. Thus as the assessee has incurred a definite legal liability and on following the mercantile system of accounting, the discount on ESOPs has rightly been debited as expenditure in the books of account. Disallowance of Provision for Doubtful debts - HELD THAT:- We find that the assessee reduced the provision for doubtful debts from sundry debtors in the balance sheet as filed before us. It further appears that the sundry debtors were shown net of provision for doubtful debts in the balance sheet. Thus keeping in view the ratio laid down by Hon’ble Supreme Court in case of Vijaya Bank vs. CIT [2010 (4) TMI 46 - SUPREME COURT], we hold that the provision for doubtful debts is allowable and thus the addition made by the revenue are hereby deleted.
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