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2016 (1) TMI 221 - AT - Income TaxDisallowance recoverable written off in the Profit and Loss Account - Held that:- The assessee has been following the system of Accounting methodology which is accepted. Bad Debts occurred in the normal course of business and write off can be made after considering the recovery of Debtors becoming doubtful and the assessee has not squared off the debtors account. Under amended provisions of section 36(i)(vii) of the act effective from 1st April, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact has become irrecoverable, it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Further, the assessee has not placed on record before the lower authorities to show that it debtors were not in a position to pay the debts or have refused for payment. It is an unilateral act on the part of the assessee to write off all these amount without bring any material on record to show that amount are not recoverable. We after considering the accounting methodology of assessee company and provisions of law on bad debts in the order of the Commissioner of Income Tax (Appeals) on this ground and same is upheld.- Decided against assessee. Contribution made towards the approved Employees Group Gratuity Fund Trust - Held that:- The Revenue has disputed this issue after post De-merger, even though there is no such change in objects. But the ld.CIT(A) erred in upholding the order of the Assessing Officer without realizing that gratuity fund is for welfare measures of the employees, and has been approved from 1990 onwards. Since there is a apprehension by the Revenue that approval has to be obtained for the name change, we remit the issue in dispute to the file of the Assessing Officer to re-examine the gratuity fund objective and contributions and assessee shall obtain necessary approvals from the Income Tax Department if required. It is nevertheless to say that opportunity of being heard be granted to the assessee and decide the issue on merits. Disallowance of foreign travel expenses - Held that:- The assessee company is having global business operations and definitely such subsidiary companies are to be managed in accordance with standard accounting principle and Indian laws. The expenditure percentage compared to turnover is very small amount. The expenditure incurred for the business wholly and exclusively in carrying out the operations and there is nexus between expenditure and income of parent and subsidiary company. If such expenditure is disallowed the subsidiary company has to claim deduction in respective countries accounts. But practically it will be a difficult task considering double taxation agreements between countries. Therefore, it is apparent from the facts of the case that the expenditure has been incurred wholly and exclusively for the purpose of business and falls within the provisions of Sec.37(1) of the Act. Hence, we direct the Assessing Officer to delete the addition. - Decided in favour of assessee. Non deduction of TDS on commission payment made to foreign agencies - Held that:- The services rendered by the said parties related to clearing, warehousing and freight charges, outside India. The logistics service rendered was essentially warehousing facility. In our opinion, this cannot be equated with managerial, technical or consultancy services. Even if it is considered as technical service, the fee was payable only for services utilized by the assessee in the business or profession carried on by the said nonresidents outside India. Such business or profession of the non-residents, earned them income outside India. Thus, it would fall within the exception given under sub-clause (b) of Section 9(1) of the Act. In any case, under Section 195 of the Act, assessee is liable to deduct tax only where the payment made to non-residents is chargeable to tax under the provisions of the Act. In the circumstances mentioned above, assessee was justified in having a bonafide belief that the payments did not warrant application of Section 195 of the Act. In such circumstances, we are of the opinion that it could not have been saddled with the consequences mentioned under Section 40(a)(i) of the Act. Disallowances were rightly deleted by the ld. CIT(Appeals) - Decided in favour of assessee Additional deduction u/s.54EC - Held that:- The assessee has invested in long term capital gains within six months from the date of transfer u/s.54EC of the Act in National Highway Authority of India capital gain bond and complied with the provisions and there is no dispute about the investment. The Assessing Officer tried to make a distinction of provisions for restricting investment of ₹ 50,00,000/- only in one financial year. The assessee company has invested in two installments falling in two financial years and availed tax exemption. The ld.CIT(A) had examined the facts and dealt with Finance Act, 2014 on this issue and also relied on Jurisdictional High Court decision of C. Jaichander and Coromandel Industries Ltd (2014 (11) TMI 54 - MADRAS HIGH COURT ). We after considering the apparent facts and jurisdictional High Court decision are not inclined to interfere with the order of the Commissioner of Income Tax (Appeals) and accordingly, dismiss the Revenue ground.- Decided in favour of assessee
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