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2011 (11) TMI 509 - AT - Income TaxLoss on foreign exchange rate fluctuation - remittance of research and know-how fee to the foreign collaborator - Non deduction of TDS - disallowance u/s 40(a)(i) - Held that: In present case, it is evident that the assessee was required to deduct tax at source on said transaction and it deducted requisite tax at source as per section 195(1) at the time when such income was credited to the account of the foreign concern. Consequently, it would follow that when such income is actually paid by the assessee to the foreign concern, the same would not again invite the deduction of tax at source as per section 195(1). As per the assessee, out of the total claim of Rs. 42,89,872/- as fourth instalment of research and know-how fee in this year, tax has been deducted in relation to a sum of Rs. 34,07,638/- and, therefore, it is merely a case involving short deduction of tax at source and not a case for failure to deduct tax at source. Thus as decided in DCIT - 11(2) Versus Chandabhoy & Jassobhoy Chandabhoy & Jassobhoy, (2011 (7) TMI 956 - ITAT MUMBAI) the disallowance envisaged in section 40(a)(ia) can be invoked only in the event of non-deduction of tax, but not in cases involving short deduction of tax at source - Decided in favor of assessee. Provision for doubtful debts - Dis-allowance being contingent liability - Held that:- Though the claim of the assessee is under head "provision for doubtful debts", in actuality the claim is based on certain deductions claimed to be made by the Government buyers as liquidated damages for late supply of goods, etc. CIT (A) in his order has referred to two journal entries in this regard and on that basis directed the AO to allow the claim, subject to the verification that the liability crystallized in this year or not but AO in his order has not carried out the directions of the CIT (A) in its proper perspective & has merely gone by the fact that the claim has been made under "provision for doubtful debts"- matter restored to the file of the AO with directions to consider the true nature of the claim - in favor of the assessee by way of remand. Excise duty payment on finished goods not included in the value of closing stock - CIT deleted the addition - As similar issue has been adjudicated by the Tribunal in favour of the assessee thus following the precedent the decision of the CIT (Appeals) deleting the addition on account of Excise Duty payable on finished goods not included in the valuation of closing stock is hereby affirmed - Decided in favor of assessee. Netting of interest received from interest paid to Department - Held that:- As assessee is assessable in respect of the gross interest received from the Income-tax Department and not merely on the net interest remaining after set off of interest paid to the Department the interest payment has also not been held to be deductible from interest received in order to arrive at the assessable income - Decided against the assessee.
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