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2018 (5) TMI 952 - AT - Income TaxDisallowance u/s 14A - Held that:- It is a settled position of law that the provisions of section 14A can be applied to quantify the expenses in relation to exempt income. Since the exempt income is Nil, section 14A will not apply. The Rule 8D can be applied only when there is difficulty in finding the expenditure relating to exempt income. The provisions of section 14A and Rule 8D will not apply to the present case. We find that the investments were made purely on account of commercial necessity and as no exempt income was earned from the investment so made, the provisions of Section 14A will not be applicable in the case of assessee. Therefore, as section 14A cannot be invoked without any exempt income, accordingly, we dismiss the grounds raised by the revenue and allow the grounds raised by the assessee in C.O. Non-compete fee payment - not claimed in Return of income - whether payment is not incurred wholly and exclusively for the business of the assesse as there is no commercial expediency in this transaction? - Held that:- In the plethora of cases, the courts have held that CIT(A) and ITAT have power to allow deduction for expenditure to assessee to which it was otherwise entitled even though no claim was made in the return of income. The assessee is entitled to a particular claim, which it missed in the return of income, may claim during appellate proceedings. The assessee should ensure that all necessary evidences are submitted during appellate proceedings and available on record. The case to refer in particular is CIT vs. Pruthvi Brokers & Shareholders P. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT). In the case under consideration, the assessee has submitted all relevant information on record relevant to claim the non-compete payment and it is not in dispute. The only issue is, it is not claimed in the return of income. Since, CIT(A) has power to allow the claim as per the above decisions of higher courts, it is within the powers of CIT(A) to allow the claim of the assessee. TDS u/s 194H - Payment of commission to Shri P. Ramaraju without deducting TDS - Held that:- This is a genuine expenditure and it should be allowed. This is relating to market development and it cannot be treated as commission payment, hence, provisions of section 194H will not apply. We notice that this payment was made as appreciation of market development and the persons involved are consignment agents,m the assessee has not brought on record to show that how much consignment sales were recorded by such consignment agents and how the special discount was calculated. In the absence of such crucial information and it is fact that a lumpsum payment was made, it could be termed as sales commission or additional incentive awarded to the consignment agents. Either way, it will attract TDS. Therefore, the assessee may treat the expenditure on the basis of accounting followed by it, but, the nature of expenditure cannot change. Therefore, we sustain the disallowance made by the AO. Accordingly, ground raised by the assessee is dismissed.
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