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2010 (12) TMI 872 - AT - Income TaxCapital or revenue expenditure - In the course of three previous year period, when the expenditure were incurred by the assessee-company, those expenditure were debited in the accounts of the assessee- company under the head "expenditure pending allocation" - When the assessee has offered the recovered amount as its income, it is quite rightful in its part to claim the earlier expenditure as deductions in computing the income arising out the amount recovered from Indonesian subsidiary - accounting treatment given by the assessee-company can be justified for the reason that the real character could be decided only when the assessee-company was able to recover the amounts from its Indonesian subsidiary - Decided in favor of the assessee Regarding disallowance u/s 40(a)(i) - After examining the scheme of sec.195, the Board has clarified that no tax is deductible under sec.195 and consequently the expenditure on export commission and other related charges payable to a non-resident for services rendered outside India becomes an allowable expenditure - If the tax is not so assessable, there is no question of tax at source being deducted - The Court in its earlier decision what was held is that the Assessing Officer has to be approached under sec.195(2), to decide the correct amount of deduction where tax is deductible and not to invoke sec.195(2) indiscriminately without bothering and looking into whether the payments contained element of income or not.
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