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2022 (12) TMI 1081 - AT - Income TaxTDS u/s 195 - disallowance u/s 40(a)(i) - payments were made to US and Australia based entities as commission towards procurement and solicitation of business - HELD THAT:- The impugned payments made by the assessee are in the nature of selling commission for procurement of orders outside India for the assessee. Upon examination of contractual terms, these payments could not be termed as ‘fees for technical services’. Further, none of the payee is shown to have any PE in India. Therefore, the findings of Ld. CIT(A), in that regard, could not be faulted with. AO has invoked Explanation-2 to Sec.195(1) as inserted by Finance Act, 2012 w.r.e.f. 01.04.1962. However, the assessee could not be expected to deduct tax at source in this year by foreseeing such a future amendment to law. In the impugned year, there was no such obligation on the assessee to deduct TDS but such obligation has arisen out of subsequent amendment to law which assessee could never anticipate. As relying on M/S RANE ENGINE VALVES LTD. case [2022 (3) TMI 1022 - ITAT CHENNAI] assessee could not be expected to deduct Tax at source on payment made to non-residents on the basis of subsequent amendment to the law with retrospective effect from earlier date because the assessee cannot foresee the amendment and deduct TDS. Therefore, the disallowance made u/s 40(a)(i) would be unwarranted. Similar is the situation before us. No contrary decision is on record. Therefore, following this decision, we confirm the stand of Ld. CIT(A). The corresponding grounds raised by the revenue stand dismissed. Disallowance u/s 14A - AOapplying Rule 8D(2)(iii), computed indirect expense disallowance - CIT(A) directed Ld. AO to consider those investments which actually yielded exempt income during the year - HELD THAT:- We find that the directions of Ld. CIT(A) are in accordance with the decision of Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] - Therefore, the impugned order could not be faulted with. We order so. The corresponding grounds raised by revenue stand dismissed.
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