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2023 (7) TMI 1155 - AT - Income TaxTDS u/s 195 - disallowance of commission paid to foreign agents for non-deduction of TDS - CIT(A) deleted the disallowance of commission paid to foreign agents holding that the assessee was not liable to deduct TDS at source on commission paid to agents located outside India for procuring orders from buyers were all located outside India and not having permanent establishment in India - HELD THAT:- Whether commission paid to foreign agents for procurement of orders is liable for TDS u/s 195 r.w.s. 9(1)(vii) is now settled by the decision of Panalfa Autoelektrik Ltd [2014 (9) TMI 706 - DELHI HIGH COURT] wherein it has been held that the commission paid to foreign agents for procurement of orders do not fall under Technical, Managerial or consultancy services so as to attract the provisions of section 9(1)(vii) r.w.s. 195. Following the decision of Panalfa Autoelektrik Ltd[ [supra] similar view in the case of ACIT Vs. Kapoor Industries Ltd [2021 (1) TMI 1080 - ITAT DELHI] Therefore, we do not find any good reason to interfere with the findings of the ld. CIT (Appeals). Decided against revenue. Disallowance of export promotion expenses for non-deduction of TDS - HELD THAT:- As already held payments to organizations located outside India and not having permanent establishment in India are not covered u/s 9 of the Act and consequently Section 195 of the Act does not come into play as it is not a "Fee for Technical Service". Thus payment to persons located outside India is thus allowed - Decided against revenue. Disallowance of interest expense - assessee has claimed interest expenses on secured and un-secured loans - CIT (Appeals) deleted the disallowance of interest for the reason that the advances made by the assessee for purchase of property were fully covered by the non-interest bearing funds as available with the assessee - HELD THAT:- As finding by the ld. CIT (Appeals) that the interest bearing funds have been fully utilized for stock and sundry debtors. CIT (Appeals) deleted the disallowance of interest as the advances for purchase of property are covered by non-interest bearing funds which the assessee is having correctly.Decided against revenue. Disallowance on account of preservation charges u/s 40A(2)(b) - these expenses have been claimed in respect of one of the sister concerns of the assessee - HELD THAT:- As in the course of proceedings the ld. CIT (Appeals) the assessee has filed written submissions explaining why the assessee paid preservation charges and considering the submissions of the assessee the ld. CIT (Appeals) deleted the disallowance as held AO made the impugned addition invoking the provisions of Section 40A(2)(b) by treating the increase in expenditure as excessive payments. The submissions by the appellant that the storage capacity is to be maintained keeping in view the peak requirement and not on the basis of total sales is justified. Ultimately it is a business decision and does not call for the AO to sit in judgment over this. The increase in expenditure is apparently due to increase in chambers taken on rent. The need for more storage space in Mumbai is also justified with the increase in processing at Mumbai - Thus the genuineness of the extra expenditure is for the purposes of business hence the addition is deleted - Decided against revenue.
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