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2019 (1) TMI 1400 - AT - Income TaxAddition u/s 36(1)(iii) - loans given to the related parties/ corporate bodies without charging any interest - proof of commercial expediency - Held that:- CIT-A, has given a categorical finding that the amount of INR 3,500,000 were part of the original business advances given by the assessee to the sister concern for the purchase of refrigerated vehicle as a business advance. Even otherwise the finding of the learned CIT – A, cannot be disputed by the learned departmental representative that the above order was given by the assessee out of the door interest-bearing funds. No infirmity in the order of the learned CIT – A, in deleting the disallowance out of the interest expenditure on account of advances given to unrelated party. Accordingly, ground number 1 of the appeal of the revenue is dismissed. Non-deduction of TDS u/s 195 - tds on commission payment to its foreign agent for rendering sales and marketing services abroad assessee had deducted TDS on part payment but not on balance payment - Held that:- Undisputedly the assessee has made commission payment to its foreign agent for rendering sales and marketing services abroad for the purposes of the products to be sold to the dairy development Board, Nepal. It is also undisputed that the foreign agents have rendered the services abroad and none of the agent has any fixed base in India. Therefore, it, it can be concluded that the amount paid to them was not taxable in India and thus there was no requirement to deduct tax at source. Therefore, it is apparent that such payment did not entail any tax liability under the income tax act, as well as the double taxation avoidance agreement between India and Nepal. Further the honourable Gujarat High Court has held that the fundamental principle of deducting the tax at source in connection with the payment only arises when the sum is chargeable to tax under the act. Therefore respectfully following the decision of NOVA TECHNOCAST PVT LTD [2018 (5) TMI 1182 - GUJARAT HIGH COURT]. We confirm the finding of the learned CIT – A, where the disallowance has rightly been deleted - decided in favour of assessee.
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