TMI Blog2005 (5) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 is against confirmation of disallowance of Rs. 10,000 out of training and conference expenses under section 37(2A) were not pressed by the ld. Counsel for the assessee at the time of hearing. Therefore, both the grounds are dismissed being not pressed. 3. Ground No. 4 is against confirmation of addition of Rs. 1,88,565 being income received from Bansal Traders. 4. The Counsel for the assessee submitted that this income has been taxed in the assessment year 1993-94. Therefore, the same cannot be taxed twice. The Counsel also submitted that he has no objection if the direction be issued to the Assessing Officer either to assess this income in the assessment year under appeal as upheld by the CIT(A) in the impugned order or in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 9th February, 1994. 9. On the other hand, the ld. D.R. contended that the liability to pay the amount to the deceased employees is not contractual but only gratuitous. Therefore, it is not for the purpose of business of the assessee-company. Hence, no deduction is allowable under section 37(1). 10. Having heard both the sides, we have gone through the orders of the authorities below. Though the payment is made not out of any agreement or by virtue of any statutory obligation such payment are meant to get the best from its workers. As a prudent businessman, the assessee is liable to see the betterment of the employees and, hence, paid the amount to the relatives of the deceased employee. We find that this issue is covered in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of balance amount of Rs. 2,41,67,542, i.e., unpaid technical know-how as per Balance Sheet, the Assessing Officer stated that Rs. 56,77,140 and cess Rs. 3,75,249 totalling to Rs. 60,52,389 is neither deducted nor paid the TDS nor any provision has been made for deducting the TDS. Assessing Officer, accordingly, took the view that in terms of section 40( a ), deduction under section 35AB is admissible only if the tax on account of technical know-how fees is paid or debited under Chapter XVIII-B of the Income-tax Act, 1961. In the assessment order, the Assessing Officer relying on his assessment order for the assessment year 1990-91 held that no deduction will be allowed on amount of Rs. 60,52,389 because the assessee has not complied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income chargeable under the head Profits and gains of business or profession ( a )in the case of any assessee ( i )any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable outside India, on which tax has not been paid or deducted under Chapter XVII-B : Provided that where in respect of any such sum, tax has been paid or deducted under Chapter XVII-B in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid or deducted." Provisions of section 40 are in the nature of overriding provisions. It starts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed on accrual basis. It is to be allowed only on the basis of "paid". Thus, a sum, which is paid in a year and increased by foreign exchange fluctuation, will be considered for allowable under section 35AB subject to TDS deducted and paid to the Government account thereon. 16. In view of the foregoing, we set aside the order of the CIT(A) on this issue and remit this issue back to the file of the Assessing Officer with the direction that he will allow the deduction under section 35AB in the year when the amount is actually paid subject to TDS. We also direct the assessee to furnish the complete details of remittance made/tax deducted at source to enable the Assessing Officer to allow deduction in accordance with the direction contai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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