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2017 (12) TMI 1703 - AT - Income TaxDeduction u/s 10AA - denial of deduction as the assessee-company had not provided any services and the assessee-company had not complied with the condition stipulated under sub-section (4) of section 10AA - CIT-A deleted addition - HELD THAT:- Any undertaking established in a SEZ is entitled to claim a relief from its profits, provided it is engaged in the manufacture or production of articles or things or provision of any service. From the above, BRL being in unit has correctly claimed relief under section 10AA of the Act on income derived from export of research services. The appellant is entitled to Section 10AA relief. It is undisputed fact that the M/s. Biocon Ltd., also enjoys the SEZ status. Therefore, by selling platform technology to the assessee-company, the motive of tax evasion cannot be attributed to M/s. Biocon Ltd., Furthermore, M/s. Mylan Ltd., also said to be unrelated party. Therefore, it cannot be even imagined that without any value addition by the assessee-company, M/s. Mylan would have paid so much of consideration. This factor, should clinch the issue in favour of the assessee-company. Thus viewed from any angle, the assessee-company cannot be denied the benefit of deduction u/s. 10AA though the reasoning adopted by the CIT(A) is cryptic. No reason to interfere with the order of the CIT(A) this issue. - Decided against revenue TDS liability on reimbursement of actual cost incurred - addition u/s 40(a)(ia) - HELD THAT:- There was no dispute with regard to the contention of the assessee-company that subject payments are merely reimbursement of the cost incurred and no profit element was present. Further there was no dispute that the payees had shown receipts as income in their respective hands and discharged the tax liability. In the light of these facts, we hold that the assessee-company is not under obligation to deduct tax at source on the payments which are not liable to tax in the hands of the payee. Further we find no reason to differ with the reasoning of the CIT(A) that when the second proviso to section 40(a)(ia) is applicable to the facts of the present case there is no obligation to deduct tax at source and consequent disallowance u/s. 40(a)(ia). See M/S. TE CONNECTIVITY INDIA PVT. LTD. VERSUS INCOME-TAX OFFICER (LTU) (TDS) , BANGALORE [2016 (5) TMI 1222 - ITAT BANGALORE] . Thus, we do not find any reason to interfere with the order of the CIT(A). - Decided against revenue TDS u/s 195 - services rendered by non-resident parties - HELD THAT:- The assessee-company is only entitled to use the annual report given by those parties which does not mean that technology is made available to it. The co-ordinate bench of Tribunal (Delhi) in the case of ITO vs. Nokia India Pvt. Ltd. [2015 (7) TMI 476 - ITAT DELHI]) has considered an identical issue The assessee-company is not under obligation to deduct tax at source on the payments made to non-resident parties and therefore, the question of consequent disallowance u/s. 40(a)(ia) does not arise. Thus, the grounds of appeal are allowed. disallowance u/s. 14A - HELD THAT:- In the present case, there is no dispute that surplus fund far exceeds investments made. Therefore, it should be presumed that investments are made out of surplus funds of the assessee and the question of disallowance on account of interest does not arise. As regards disallowance of indirect expenditure, in the absence of recording satisfaction as to how claim of the assessee is incorrect, no disallowance can be made. The assessee-company placed reliance on the decision of the co-ordinate bench cited supra and the ratio of the decision is squarely applicable to the facts of the present case. Thus, this ground of appeal is allowed.
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