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2016 (8) TMI 745 - AT - Income TaxReopening of assessment - Held that:- When the assessee has submitted all details of payment of commission, professional fees and others, before the AO at the time of original assessment, there is no failure on the part of the assessee to disclose all facts truly and fully for its assessment and the reasons recorded by the AO that there is failure on the part of the assessee to disclose all facts truly and fully for reopening the assessment after 4 years from the end of relevant assessment year, are not justified. Accordingly, we are inclined to allow the appeal of the assessee. TDS u/s 195 - disallowance u/s.40(a)(i) being sales commission paid to various persons outside India - Held that:- As decided in assessee’s own case nature of services mentioned will come not within the definition of “fees for technical services” given under explanation 2 of Section 9(1)(vii) of the Act. By virtue of such services, the concerned recipients had not made available to the assessee any new technic or skill which assessee could use in its business. 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 non-residents 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) TDS u/s.194A - disallowance u/s.40(a)(i) being interest payment to various banks outside India - Held that:- The interest was paid to the banks located in India and not outside India and the payment was not made on foreign currency for the amount borrowed from foreign banks. Being so, this payment is exempt from the provisions of TDS u/s.194A(3)(iii)(a) and disallowance u/s.40(a)(i) is not warranted. - Decided in favour of assessee Disallowance made u/s.40(a)(i) being expenditure incurred on sales promotion, advertisement, legal fees outside India - Held that:- As noted by the CIT(Appeals), this payment is not covered under the provisions of sec.9(1)(v)/(vi)/(vii) of the Act. Being so, we confirm the findings of the CIT(Appeals) on this issue as convinced with the explanation offered by the ld. AR and held that the expenditure incurred towards promotion, advertisement and legal fee will not attract provisions of TDS and allowed the ground of appeal. Disallowance of additional depreciation claimed - Held that:- As decided in assessee’s own case on perusal of the provisions of section 32 as applicable for the relevant assessment year clearly shows that additional depreciation is allowable on the plant and machinery only for the year in which the capacity expansion has taken place which has resulted in the substantial increase in the installed capacity. In the assessee’s case this took place in the assessment year 2005-06 and the assessee has also claimed the additional depreciation during that year and the same has also been allowed. Each assessment year is separate and independent assessment year. The provisions of section 32 of the Act do not provide for carry forward of the residual additional depreciation, if any. - Decided against the assessee. Disallowance u/s.14A based on Rule 8D - Held that:- Rule 8D for this A.Y. 2008-09 is not applicable, as this came into effect from 24.3.2008.. In view of the above decision of the jurisdictional High Court, we direct the Assessing Officer to disallow 2% exempted income. Allowing the depreciating on UPS at 60% as against the assessee’s claim of 80% - Decided against assessee. Deduction claimed u/s.35AC - CIT(A) reducing the claim u/s.10B by allocating deduction claimed u/s.35AC and exempted income - Held that:- This issue came for consideration before the Tribunal in assessee’s own case for the A.Y. 2007-08 and the CIT(Appeals) has given a finding that the AO should carry out similar exercise in line with directions given by the Tribunal for the A.Y. 2007-08 for this year also and find out the tangible benefits which the 10B units have derived from the R & D activities carried out by the assessee and decide the disallowance Addition made towards power charges paid to Wescare India Ltd. - Held that:- This issue came up for consideration before the Tribunal in assessee’s own case wherein the Tribunal remitted the issue back to the file of the AO for fresh consideration. Accordingly, on similar line, we remit this issue back to the file of the AO for fresh consideration. This ground is allowed for statistical purposes. Assessee is entitled to depreciation at 60% on UPS, treating it as part of computers. Addition back the disallowance u/s.14A to the book profit of the assessee - Held that:- This issue of disallowance made by the Assessing Officer for this assessment year by invoking the provisions of sec.14A r.w.Rule 8D, was in normal computation also. In our opinion, disallowance made u/s.14A r.w. Rule 8D cannot be added while computing book profit u/s.115JB of the Act that the disallowance is only disallowance for the purpose of computing taxable income of the assessee in the normal course. There is no provision in the Act to add these kind of disallowance while computing book profit u/s.115JB and it cannot change the book profit on this count. Therefore, even if there is an addition in view of provision u/s.14A r.w. Rule 8D, that cannot be added back to compute the book profit u/s.115JB
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