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2016 (8) TMI 906 - AT - Income TaxReduction in Quantum of MAT Credit U/sec 115JAA - reduction on account of exclusion of Educational cess and surcharge - Held that - The income tax includes surcharge and educational cess for giving the credit u/s.115JAA of the Act. No law contrary to the above said finding has been produced before us. Accordingly we set aside the order passed by the CIT(A) on this issue and decide this issue in favour of the assessee and against the revenue and direct the Assessing Officer to allow the MAT credit against the tax liability of the assessee including of surcharge and educational cess. Accordingly this issue is decided in favour of the assessee against the revenue. Disallowance of commission U/s.9 r.w.s.195 and section 40(a)(i) of the Act - Held that - On perusal of the order passed by the Assessing Officer it came into notice that the assessee has paid a sum of Rs. 50, 90, 141/- to various parties in foreign countries under the head professional services in addition to commission paid for export. The provision relating about the payment on professional fees is dealt by different section i.e. under the provision of section 9 r.w.s. and 195 of the Act but so far as the commission paid for export is concerned the same is required to be dealt with by the provision of the explanation 2 to clause (VII) of section 9 of the Act. In this regard we also support law settled in CEAT International S.A. Vs. CIT (1998 (11) TMI 111 - BOMBAY High Court ) and CIT Vs. Sara International Ltd. 2008 (3) TMI 686 - DELHI HIGH COURT and CLSA Ltd. Vs. ITO (International Taxation) 2013 (1) TMI 796 - ITAT MUMBAI . Since the expenditure has not been differentiated in professional services and commission paid for exports therefore we are of the view that the matter is required to be examined afresh at the end of Assessing Officer to decide the expenditure incurred for professional services and commission paid for exports in the light of the judgment mentioned above by giving an opportunity of being heard to the assessee accordingly this issue is decide in favour of the assessee against the revenue. Disallowance u/s 14A - Held that - There should be a proximate relationship between the expenditure and the income which does not form part of the total income. In the case in hand the assessee has claimed that no expenditure has been incurred for earning the exempt income therefore it was incumbent on the AO to find out as to whether the assessee has incurred any expenditure in relation to income which does not form part of the total income and if so to quantify the expenditure of disallowance. The AO has not brought on record any fact or material to show that any expenditure has been incurred on the activity which has resulted into both taxable and non taxable income. Therefore in our view when the assessee has prima facie brought out a case that no expenditure has been incurred for earning the exempt income the provisions of section 14A cannot be applied. Accordingly we delete the addition disallowance made by AO u/.s14 A r.w. Rule 8D - Decided in favour of the assessee. Disallowance u/s.35 in respect of the capital expenditure on research and development - claim of the assessee was declined on the ground of that the assessee received the approval late and the assessee should claim the exemption by filing the revised return which the assessee had not done - Held that - CIT(A) is of the view that no doubt the assessee received the approval late but the assessee can raise the claim by filing the revised return before the competent authority even at the stage of appeal which can be accepted therefore allowed the claim of the assessee. Undoubtedly the approval u/s.35(2AB) of the Act was not received well in time and after receipt of approval the assessee claimed the capital expenditure by filing the revised return. The CIT(A) has considered the claim of the assessee in accordance with law. Therefore we are of the view that the CIT(A) has decided this issue judiciously and correctly which does not require to interfere with at this appellate stage. Accordingly this issue is decided in favour of the assessee against the revenue.
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