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2017 (9) TMI 573 - AT - Income TaxAllowable business expenditure - demurrages on shipment for which NMDC is liable to pay as per understanding between NMDC & MMTC - Held that:- Allowability of the expenditure of port charges as well as the demurrage charges have to be determined having regard to the above two clauses of the agreement. On plain reading of the above two clauses, it is manifest that the appellant has to bear the expenditure of port charges relating to export of cargo and the demurrage charges and therefore, we hold that the AO as well as the CIT(A) mis-construed the provisions of clauses governing the port charges and demurrage charges and erroneously held that expenditure was reimbursable to the appellant. In these circumstances, we direct the AO to allow this expenditure. - Decided in favour of assessee. Disallowance of expenditure incurred on Corporate Social Responsibility expenditure - Allowable business expenditure - whether this expenditure was incurred voluntarily there was no business expediency? - Held that:- the entire expenditure incurred on corporate responsibility cannot be allowed as deduction. While coming to this conclusion, we also draw our support from the decision of the Co-ordinate Bench of Bangalore in the case of Kanhaiyalal Dudheria Vs. JCIT, Bellary [2017 (6) TMI 779 - ITAT BANGALORE ], wherein one of us (Accountant Member) is the Author and in that case, involving identical fact situation and it was held that on failure of assessee to discharge onus of proving that expenditure was incurred for the purpose of business, it amounts to application of income voluntarily towards charity which cannot be allowed as deduction. - Decided against assessee Disallowance of commission expenditure on account of non-deduction of tax at source - appellant had not deducted tax at source on the commission paid @ 2.8% of the FOB price paid to the MMTC - Held that:- No doubt, there is no direct payment in the form of commission payment to the MMTC by the appellant. But the mode of payment and the treatment in the Books of Account has no relevance to determine the nature of transaction. It is a case of the AO that the appellant had paid commission @2.8% of FOB value of the exports for acting as canalising agent to the MMTC. This commission was paid in the form of reduction from the value of the invoices. The AO also referred to the discussion note between the appellant and MMTC on 31-03-2007 and also examined the Director (Marketing) and had come to the conclusion that commission payment was made without deducting tax at source. The appellant had not filed any evidence either before the lower authorities or before us controverting the findings of the AO. He merely placed reliance on the orders of the Co- ordinate Bench for the earlier years. Needless to mention that this issue requires to be adjudicated having regards to the facts of the case. Therefore, placing reliance on the orders of the Co-ordinate Bench in earlier years is totally misplaced and in fact absence of any evidence brought on record indicating that no commission paid to the MMTC, we uphold the action of the AO, holding that the assessee is liable to deduct tax at source on commission payment. Accordingly, the AO was justified in disallowing the same in invoking the provision of section 40(a)(ia). - Decided against assessee.
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