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2020 (11) TMI 270 - AT - Income TaxNature of expenses - product development expenses - revenue or capital expenditure - HELD THAT:- As decided in own case for immediate preceding assessment year 2011-12 even prior to the current year as well as during the year the assessee has purchased and sold the product which were tested as per the analytical report. We also observe that assessee has been in the business of manufacturing of pesticides since last seven years and the practice of getting the product tested with analytical report was being followed by the assessee since earlier years. Therefore we find that observation of the assessing officer was not factually correct. TDS u/s 195 - Disallowance of foreign commission u/s. 40(a)(i) - assessee has paid export Sales Commission to various non-resident parties on which TDS was not deducted - HELD THAT:- In the case of GE Technology [2010 (9) TMI 7 - SUPREME COURT] wherein it is held that pair is bound to deduct tax at sourced only if the tax is assessable in India if tax is not so assessable, there is no question of tax at source being deducted. Assessee also cited a judgment of MGM Exports [2018 (5) TMI 1240 - GUJARAT HIGH COURT] wherein held that fundamental principle of deducting tax at source in connection with payment only, where the sum is chargeable to tax under the Act, still continues to hold the field. In the present case, the Revenue has not seven seriously contended that the payment to foreign commission agent was not taxable in India. - Decided against revenue. Disallowance of interest u/s. 40A(2)(b) - justification for interest paid on unsecured loan at the rate of 18%. - A.O. after reducing 3% of interest allowed 15% interest - CIT(A) who granted relief on the ground that A.O. has not given any basis and support to adopt the interest rate at 15% per annum as the prevalent interest rate - HELD THAT:- In the matter of Laxmi Pulse Rice [2012 (8) TMI 1183 - ITAT AHMEDABAD ] wherein similar issue was decided by the Co-ordinate Bench in favour of the assessee and allowed 18% of interest and similar rate of interest was allowed by the Co-ordinate Bench. Disallowance of capitalization of interest u/s. 36(1)(iii) - CIT(A) who granted relief to the assessee on the ground that interest bearing funds utilized for the capital advances is without any basis and therefore disallowance of interest was deleted - HELD THAT:- We can read from the order of the ld. CIT(A) wherein audited balance sheet with regard to share capital and reserve and surplus were reproduced wherein assessee is having share capital of ₹ 2500 lacs and reserve and surplus is having of ₹ 2514 lacs and total comes to 5014 lacs. Meaning thereby, assessee is having interest free funds for much more. - Decided against revenue.
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