Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (10) TMI 532 - AT - Income TaxDisallowance u/s 14A - whether assessee has not earned any exempt income? - Held that:- From the assessment order or even the order of the CIT(A) it is not forthcoming whether this particular factual aspect was at all examined. In case the assessee has not earned any exempt income during the relevant previous year no disallowance can be made under section 14A of the Act. We direct the AO to examine this fact and if upon such examination it is found that in the relevant previous year the assessee has not earned any exempt income, by way of dividend or otherwise, no disallowance under section 14A can be made. In any case of the matter, exclusion of investments not yielding exempt income would arise only if the provisions of Section 14A is applicable in the event of assessee earning any exempt income in the relevant previous year. In the absence of such income section 14A itself is inapplicable. Accordingly, ground raised is allowed. Disallowance under section 40(a)(ia) - non deduction of tax under section 194H on the payments made to Restricted Money Changers (RMCs) - Held that:- RMCs are free to sell foreign currency bought from tourists to assessee, RBI or any other person authorised by the RBI to deal in foreign currency. It is also to be noted that both the RMCs as well as the assessee have shown foreign currency as their stock in trade. The assessee has no relationship with the persons from whom the RMCs purchase foreign currency and the assessee is no way connected to the concerned tourists. Therefore, in our view the transaction between the assessee and the RMCs is on principal to principal basis and there is no principal agent relationship existing between them. Merely because in the financial statement assessee has debited the amount as commission it cannot be treated so without looking at the real nature of the transaction. The AO must bring on record material to establish that there is a principal agent relationship existing between the assessee and the RMCs. No enquiry has been made by the AO with the RMCs to find out the real nature of transactions between them. Further, assessee’s contention that in no other place in India such premium paid has been disallowed requires to be taken note of. It is also relevant to observe, even in respect of premium payment in Goa, except, the impugned assessment year in no other assessment year such disallowance under section 40(a)(ia) has been made. That being the case, we are inclined to delete the addition made by the AO. Disallowance u/s 40(a)(ia) - short deduction of tax at source - Held that:- A plain reading of section 40(a)(ia) would also make it clear that disallowance under such provision can be made only if there is no deduction of tax at source or the assessee has failed to pay to the government account the TDS amount after deducting the same. In any case of the matter, as brought to our notice by the learned A.R. the payee has offered the amount paid by the assessee as income in the relevant assessment year. Therefore, in terms of the second proviso to section 40(a)(ia) no disallowance can be made. In view of the aforesaid, we delete the addition made by the AO and affirmed by the CIT(A). Grounds are allowed
|