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2018 (8) TMI 2100 - AT - Income TaxTDS u/s 194J - Expenditure on rendering professional services - Non deduction of TDS - Nature of expenses - HELD THAT:- Assessee had deducted tax at source and had made payment of the tax so deducted to the credit of the Central Government as per the due dates specified in Section 40(a)(ia) of the Act. Copies of the relevant TRACES of TDS Centralized processing cell - We are of the view that it would be just and appropriate to set aside the order of the CIT(A) and remand for verification by the AO the claim of the Assessee that it had complied with the provisions of sec.40(a)(ia) of the Act. If tax had been deducted and paid as claimed, then the addition made is directed to be deleted. Disallowance u/s. 14A - expenditure incurred earning exempt income - whether no interest paid can be attributable to the income received and the A.O. has not given a finding that the claim made by the assessee is not correct? - HELD THAT:- Assessee has to make a claim (including a claim that no expenditure was incurred) with regard to expenditure incurred for earning income which is not chargeable to tax. Such a claim has to be examined by the AO and only if on an objective satisfaction arrived at by the AO that the claim made by the assessee is not correct, can the AO proceed to apply the computation mode as specified in Rule 8D(2) of the Rules. In the present case, the Assessee has not given such a basis. Assessee submitted that the issue may be set aside to the AO and the Assessee will give the basis on which it computed the disallowance u/s.14A - Thus set aside the order of the CIT(A) on this issue and remand the issue for fresh consideration. Addition on account of provision for warranty while computing income from business - Assessee claimed deduction as provision for warranty liability on the pressure cookers and electronic items sold by it - AO disallowed the claim for deduction for the reason that the estimation of liability based on which provision for warranty liability was made by the Assessee was not scientific - HELD THAT:- Assessee is in this line of business for a very long time and he should be in a position to demonstrate that making provision of 1% of the sale as provision for anticipated liability on account of warranty claims is based on its own past experience. We therefore deem it fit and proper to set aside the order of the CIT(A) and remand for fresh consideration by the AO, the question of proper estimate of liability on account of provision for warranty based on past events. The Assessee is directed to furnish the necessary figures in this regard to justify its claim. The AO shall examine the claim in the light of the principles laid down by the Hon’ble Supreme Court in the case of Rotor Controls India Pvt.Ltd. [2009 (5) TMI 16 - SUPREME COURT] after affording the Assessee opportunity of being heard. The appeal of the revenue is accordingly treated as allowed for statistical purpose.
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