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2017 (2) TMI 681 - AT - Income TaxTDS u/s 195 - non deduction of TDS u/s 195 on commission paid to two foreign parties - addition u/s 40(a)(ia) - Held that:- Undisputedly, the commission has been paid to two foreign parties outside India on account of sales orders procured by them for the assessee. The orders were obtained by them from outside India and no services have been rendered by them in India. Payments have also been made outside India. Under the provisions of section 5 and section 9 of the Act, the said commission payment on export sales cannot be held chargeable to tax in India. In view of that, the provisions of section 195 are not applicable and thus the provisions of section 40(a)(ia) have wrongly been applied by the AO. The addition thus made under section 40(a)(ia) is thus deleted and ground of appeal is allowed. Addition on account of under-statement of interest income earned - Held that:- In the return of income, the appellant has claimed credit of the whole of such TDS of ₹ 43,619 which in terms of section 199 of the Act, impliedly means that the corresponding income has been offered to tax and where the same is not offered to tax, it should be brought to tax in that year. There cannot be a situation where the credit for TDS is made in one year and income is offered to tax in another year. In view of that, in the instant case, where the appellant has earned interest income on FDR placed with Corporation Bank and an amount of ₹ 2,79,949 has only been offered to tax, an addition to extent of ₹ 1,37,722 (Rs 4,17,671 less ₹ 2,79,949) has rightly been made by the AO. The appellant therefore gets relief of ₹ 2,79,949 which has already been offered to tax and addition to that extent is deleted. The ground of appeal is thus partly allowed. Addition on account of disallowance of bad debts - Held that:- CIT(A) has given a finding that most of these payments claimed as bad debts have been shown in the books as excess payment made for purchase of consumable stores, freight outwards, staff advance etc. It is thus not in dispute that these excess payments are towards various expenditure pertaining to the business of the appellant and thus the test of business expediency is satisfied. Further, the same have been written off in the books of accounts during the year under consideration. In our view, such written off of sundry business advances are in the course of carrying on the business of the assessee and are allowable in the hands of the assessee. The ground of appeal is thus allowed.
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