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2016 (1) TMI 251 - AT - Income TaxDenial of exemption claimed u/s.10B on export proceeds received after stipulated period and foreign exchange gains - Held that:- At the outset, RBI is the competent authority to give special permission in writing to the assessee to receive sale proceeds after the said date. In the present case ₹ 48,23,426/- was received in October, 2008 and February 2009, after a period of six months from the end of the previous year and the circular of the RBI is effective from 2011 onwards in respect of inward remittances and not retrospectively. Considering the above facts, we are inclined to uphold the order of the Commissioner of Income Tax (Appeals). The ld. AO also excluded from the export turnover foreign exchange gain of ₹ 2,98,953/- for the computation of deduction u/s.10B as assessee could not explain the source for foreign exchange gains attributed to units and the ld.CIT(A) has confirmed the addition. Before us, the Authorised Representative has not submitted any particulars but pleaded for consideration of foreign exchange gains for deduction u/s.10B and it is also apparent from the facts of the case that ld.AR could not substantiate his ground with any material evidence. Therefore, we are inclined to uphold the order of the ld. Commissioner of Income Tax (Appeals) on this ground also. - Decided against assessee Disallowance u/s.14A read with Rule 8D - Held that:- We find that facts and circumstances of the present case pertaining to holding and subsidiary company of two different countries, and which needs to be verified with the quantum of share holding and DTA agreement for dividend income. We are of the considered opinion that matter needs to be re-examined and set aside the issue in dispute to the file of the Assessing Officer. The Assessing Officer is directed to allow the claim after considering the satisfactory explanations and material evidence for dividend income. - Decided in favour of assessee for statistical purposes. Disallowance u/s.40(a) (ia) - Non deduction of TDS on contract payments - Held that:- the addition u/s.40a(ia) of the Act can be made if both the conditions are satisfied in respect of applicability of TDS under chapter XVII B and tax was not deducted by the assessee. In the present case, the assessee had deducted TDS at a lower rate, on perusing the case laws and decisions relied by the ld. counsel. We found that expenses are not liable to be disallowed u/s.40(a)(ia) of the Act on account of short deduction of tax at source. The assessee has further complied with both the limbs of applicability of provisions by deducting TDS on payments and depositing the same with the Government, which is not disputed by the Assessing Officer. We are of the opinion, that if any difference in strategy of taxability or nature of payment arises, in such circumstances alternatively, the Assessing Officer can treat the assessee as defaulter u/s.201 of the Act but not by invoking provisions u/s.40(a)(ia) of the Act. It is also apparent from facts of the case the assessee has deducted TDS and remitted to the treasury and we direct the Assessing Officer to delete the impugned addition - Decided in favour of assessee. Disallowance of interior decoration works - Held that:- The expenditure incurred by the assessee is only to upkeep the business enterprises to maintain wear and tear but not to increase the productivity or manufacturing activity. The change of flooring and other connected works will only improve the brand image which is indeed required for such global company. The legal position of such expenditure when it is dismantled cannot be rebuild or used for any other purpose as held by jurisdictional Madras High Court in the case of CIT vs. Amrutanjan Finance Ltd. [2011 (8) TMI 320 - MADRAS HIGH COURT] and Thiru Arooran Sugars Ltd vs. DCIT [2013 (2) TMI 450 - Madras High Court ], were distinction has been made between capital and revenue expenditure and allowed as current repairs in the previous year. Applying the principles of law of Jurisdictional High Court. We are of the opinion that such expenditure has to treated as revenue expenditure and we direct the Assessing Officer to allow the deduction accordingly. - Decided in favour of assessee.
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