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2018 (4) TMI 517 - AT - Income TaxDisallowance being 7.5% of the total polishing charges - Held that:- All the cases the assessee has deducted tax at source on payment made to those job workers. No details submitted by the assessee are disputed. Merely because of the reason that those parties did not respond the notices u/s 133 (6) enquiry letter, it cannot be used against the assessee to disallow those expenses , when permanent account number of those persons are provided and when the assessee has also deducted tax at source on those payments. CIT has upheld disallowance 7.5 % of the total payment is on higher side and therefore to that extent unjustified. Because of the above facts, we direct the Ld. Assessing Officer to limit disallowance only to the extent of 5% of the total expenses. In view of this ground, No. 1 of the appeal of the assessee is partly allowed. Disallowance of the 50 % of the total expenses to 7.5 % of the total expenses - Held that:- we have narrated the complete facts of the case while deciding the above ground of the appeal of the assessee, where in the facts are quite better compared to the year in which 15 % disallowance was confirmed, we have reduced it to 5 % in assessee’s appeal. Hence, ground No. 1 of the appeal of the revenue is dismissed. Disallowance by reducing the WDV of the block of the asset - Held that:- Applicable rate of depreciation on electrical fittings is 10% and not 15% as claimed by the assessee as it falls under the category of ‘furniture and fittings”. The Assessee has not shown before the lower authorities that electrical fittings are falling in the classification of ‘Plant and Machineries.” to qualify as deduction at the higher rate of depreciation. . In view of this we do not find any infirmity in the order of CIT (A) . Disallowance of interest - Held that:- Hon’ble Bombay High Court in case of Reliance Utilities Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that if the assessee has more interest free funds then advances given free of interest for that case presumption is available to the assessee that amount is advance out of non interest bearing funds. In view of this disallowance of ₹ 3113654/- out of interest expenditure is not sustainable. However, there is also a statement that assessee has paid interest on Fixed capital of partners. This fact requires to be verified. In the result ground, No. 3 of the appeal is set aside to the file of AO where the assessee is directed to show that assessee has interest free funds available in the form of partner’s current account. Accordingly, this ground is allowed with above direction. Disallowance of Foreign Commission expenditure - assessee has not deducted tax at source u/s 195 - Held that:- No tax is required to be deducted as no part of the income arises in India. DR could not show that how the above income is chargeable to tax in India and tax is required to be deducted at source thereon under provision 195 of the Act. In view of above facts we find no infirmity in the order of the CIT (A) who has also giving relief to the assessee correctly .
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