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2022 (9) TMI 312 - CALCUTTA HIGH COURTTDS u/s 195 - Non deduction of TDS in terms of the provisions of Section 40(a)(ia) in respect of the advances for import of capital goods - assessee contended that the said advances was made towards import of capital goods on FOB basis at foreign sea ports, leading to transfer of title to the goods outside India and hence there is no income chargeable to tax in India and therefore the provisions of Section 195 are not attracted and such advances to suppliers have also not been charged to Profit and loss Account for the relevant assessment year - HELD THAT:- While computing the income chargeable to tax under the head profits and gains of business or profession an amount may be deducted from the profits and gains of business and profession in order to take away the said amount from the total chargeable amount under the said head. While preparing the profit and loss account of a business or profession an amount can be deducted from the professional and/or business income by debiting the profit and loss account prepared in connection with such profession or business with such amount. Such amount may also be deducted while computing the profits and gains of business or profession for the purpose of arriving at the business or professional income chargeable to tax. Therefore, if the disputed amount is neither debited from the profit and loss account of the business or profession nor has been deducted while computing the profits and gains of business or profession, Section 40 do not come into operation as such amount cannot be said to have been deducted in computing the income chargeable under such head. If an assessee has paid any amount on account of fees for technical services outside India or in India to a non-resident but has not debited such amount to the profit and loss account and has also not been claimed as deduction in computing the income chargeable under the head profits and gains of business or profession, this Court is of the considered view that, no disallowance in respect thereof can be made by invoking the provisions of Section 40a(ia). FAA observed that the total payment has not been charged to the profit and loss account which has been disallowed by the assessing officer by invoking the provisions of Section 40(a)(ia) - The first appellate authority held that since the aforesaid amount has not been debited in the profit and loss account and has also not been claimed as expenditure while computing the total taxable income under the head income from business or profession, the assessing officer was not justified in making the disallowance and accordingly directed deletion of the said disallowance. Tribunal affirmed the said finding of the first appellate authority. The first appellate authority and the Tribunal rightly interpreted the provisions of Section 40 of the said Act. In the case of Mark Auto Industries [2013 (1) TMI 448 - PUNJAB AND HARYANA HIGH COURT] did not interfere with the findings of the learned Tribunal holding that the provisions contained in Sections 40(a)(i) were not attracted in case the assesseee had not claimed deduction for the amount paid for technical knowhow - Karnataka High Court in Tally Solutions [2020 (12) TMI 1160 - KARNATAKA HIGH COURT] also held that when no amount was claimed as revenue expenditure, no disallowance u/s 40(a)(i) and (ia) of the Act would be made. This court is of the considered view that the first appellate authority was justified in deleting the disallowance made by the assessing officer by involving the provisions of Section 40(a)(i) and the Tribunal cannot be said to have faulted for not interfering with the finding of the first appellate court. Long term capital gain - Tribunal did not interfere with the guideline value rate determined by the DVO and directed the AO to rework the capital gains by adopting the said guideline value in the same manner in which the DVO had carried out the valuation. The Tribunal being the final fact finding authority was justified in scrutinising the materials on record and to arrive at a finding in respect thereof. Since the said finding is entirely factual no substantial question of law arises therefrom.
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