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2012 (5) TMI 665 - AT - Income TaxLevying tax @ 48% applicable to non-resident companies as against levy of tax @ 35% to Indian companies - issue is covered against the assessee by orders of the Tribunal(supra) in assessee’s own case, we confirm the action of authorities below by rejecting ground No.1 of appeal taken by the assessee. Disallow foreign exchange loss on outstanding foreign exchange transactions considering the same as notional loss and not the actual loss to the assessee - Held that:- Increase depreciation are allowable on additional liability arising out of fluctuation in rate of exchange and “actual payment" was not a condition precedent for making necessary adjustment in the carrying cost of the fixed asset acquired in foreign currency. In view of above, we allow ground No.2 of appeal in favour of the assessee TDS liability - Interest charged by head office and overseas offices to its Indian offices - chargeable to tax in India - Having held that the interest paid by the Indian branch of the assessee Bank to its head office and other branches outside India is not chargeable to tax in India, it follows that the provisions of section 195 would not be attracted and there being no failure to deduct tax at source from the said payment of interest made by the PE, the question of disallowance of the said interest by invoking the provisions of section 40(a)(i) does not arise. Addition u/s 14A - Held that:- We agree with ld CIT(A) that AO has not proved that investment in shares has been made by the assessee out of interest bearing funds but on the other hands sufficient funds to finance the shares is available with assessee. However, we do not agree with ld A.R. that there was no administrative cost incurred by the assessee for maintaining portfolio of the shares against which assessee has received dividend income of ₹ 13,11,750 which is exempted u/s.10(33) of the Act. We consider it prudent to estimate ₹ 25,000 as cost on account of administrative expenses towards maintaining shares portfolio by the assessee to earn dividend income which is exempted from income tax. Hence, we restrict the disallowance under section 14A of the Act to ₹ 25,000 by modifying the orders of authorities below. Ground No.1 is allowed in part. Addition of liabilities towards long outstanding DD/cheques - Held that:- Provisions of section 41(1) of the Act will be applicable only when assessee has obtained, whether in cash or in other manner whatsoever an amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him. Since in the case before us, assessee has not obtained any benefit and the liability is outstanding, we agree that the provisions of section 41(1) of the Act does not attract. Tax deducted at source in accordance with the Korean laws is also part of assessee’s total income for the assessment year under consideration - Held that:- Decided in favour of revenue
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