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2014 (8) TMI 1180 - AT - Income TaxAddition on account of low G.P - assessee was not maintaining stock register - CIT-A deleted the addition - HELD THAT:- We find that the CIT(A) has given a finding that the sale prices are fixed for years whereas the prices of raw material are fluctuating. He has also given a finding that in such a business, small variation in gross profit is not a basis to make any addition. We also find that the gross profit rate of the assessee was 42.23% in the present year as against 46% in the preceding year. Hence, fall in gross profit is about 3.27% which is less than 10% gross profit rate declared by the assessee. Considering these facts, we do not find any reason to interfere in the order of CIT(A) on this issue. This ground of of Revenue is rejected. TDS u/s 195 - Disallowance of commission to a non-resident for the technical services rendered - whether there is no explicit provision under the Act for making a payment to non-resident without deduction of tax at source? - HELD THAT:- We find that this issue regarding requirement of TDS out of payment of commission to a non-resident foreign agent for his services rendered outside India is squarely covered in favour of the assessee by a recent Tribunal decision rendered in the case of Asstt. CIT v. Lohia Starlinger Ltd. [2014 (10) TMI 700 - ITAT LUCKNOW] the second amendment cited by Revenue being insertion of explanation 2 to section 195(1) of the Act, has no relevance because in the present case, payer is already resident of India and therefore, already within the purview of section 195 (1) and there is no need in the present case to extend or broaden the scope of the term "any person responsible for paying to a non-resident" appearing in sub section 1 to section 195 of the Act. But the requirement that the payee is liable to tax in India in respect of the impugned payment has to be there to attract the provisions of section 195 (1) but in the present case, this aspect is covered in favour of the assessee and against the revenue by the judgment of Hon'ble Allahabad High Court in M/S MODEL EXIMS [2014 (6) TMI 290 - ALLAHABAD HIGH COURT] wherein held payment of commission to foreign agents did not entitle such foreign agents to pay tax in India and thus the TDS was not liable to be deducted u/s 195 of the Act - The disallowance made by AO u/s 40 (a) (i) for non-deduction of tax at source u/s 195 were not justified. Disallowance of foreign travelling expenses - assessee was making foreign trips to destinations where actually no business activities are carried out - CIT-A deleted the addition partly - HELD THAT:- CIT(A) has examined the issue in detail and has given a finding that the assessee's business involves travelling outside India and visit to Europe and USA has been justified because exports were made by the assessee to these countries. He has also given a finding that the visit to UAE has not been substantiated for the purpose of business. He has confirmed the disallowance of ₹ 2 lac in respect to visit to UAE and in the facts and circumstances of the case and in view of this fact that learned DR of the revenue could not controvert these findings of CIT(A), we do not find any reason to interfere in the order of CIT(A) on this issue. This ground is rejected. Disallowance of business promotion expense - assessee failed to explain the exigency of the expenses under this head during the course of assessment proceedings - CIT-A restricted the addition - HELD THAT:- finding of CIT(A) could not be controverted by Learned D.R. of the Revenue that as per the details of expenses, business promotion expenses mainly relate to booking of stalls. When the expenses on booking of stall is allowed to the extent of 80%, it cannot be said that the balance 20% for booking of stall is not for business purpose. There may be some expenses other than booking of stall also and in that respect, the CIT(A) has confirmed the disallowance of ₹ 10,000/-. Considering these facts, we do not find any reason to interfere in the order of CIT(A) on this issue. - Decided against revenue
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