TMI Blog2015 (10) TMI 2039X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of bad debts written off - Held that:- There is no dispute with regard to the finding that the payment were made in the regular course of business. There is no finding of the authorities below that the payment were not related to the business of the assessee. Under these facts, except in the case of QCS, where the assessee itself has admitted that no invoice was issued, the authorities below were not justified in disallowing the claim of the assessee. Therefore, we hereby direct the AO to delete the disallowance except in the case of QCS. The disallowance to the extent of ₹ 1,52,837/- is confirmed and rest of the amount is deleted. - Decided partly in favour of assessee. - I.T.A. No.573/Ahd/2012 - - - Dated:- 10-9-2015 - SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) And SHRI KUL BHARAT, JUDICIAL MEMBER For The Appellant : Shri S.N. Soparkar, AR For The Respondent : Shri Narendra Singh, Sr.DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-I, Baroda [ CIT(A) in short] dated 20/12/2011 pertaining to Assessment Year (AY) 2008-09. The Assessee has raised the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound is against confirmation of disallowance of ₹ 32,19,508/-. The ld.counsel for the assessee submitted that both the authorities below have erred in making the disallowance and adding the same to the income of the assessee. The ld.counsel for the assessee submitted that the assessee made payment to its employees posted out of India who were during the year under consideration non-resident Indian. The income earned and received was out of India, therefore such salary income was not subjected to tax in India. Under these facts, the assessee was justified for not deducting the tax at source. He submitted that the tax can be deducted when the income is taxable in India. The ld.counsel for the assessee, in support of the contention, has placed reliance on the judgement of Hon ble Karnataka High Court rendered in the case of Director of Income-tax (International Taxation) vs. Prahlad Vijendra Rao reported at (2011) 239 CTR 107 (Karna.). The ld.counsel for the assessee further placed reliance on the judgement of Hon ble High Court of Delhi rendered in the case of Mother Dairy Fruit, Vegetable (P.)Ltd. vs. CIT reported at (2011 240 CTR 40 (Delhi). 3.1. On the contrary, Sr.DR sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. The residential status of any person is determined in accordance with the provisions of section 6 of the Act. The authorities below have not made disallowance on the basis of the status of the assessee. The disallowance has been made on the basis that the income received by the persons was deemed to have been received and accrued in India. Therefore, same was taxable in India. The ld.counsel for the assessee argued at length to buttress the contention that salary paid to employees posted out of India, and rendering services out of India would not be taxable. The Hon ble Karnataka High Court in the case of Director of Income Tax (Int.Taxn.) vs. Prahlad Vijendra Rao (supra) noted the fact that the employee being Chief Engineer working in a ship, stayed out of India during the relevant period for 227 days and that salary was earned by him was on account of the work discharged by him on board during the said period, which outside the shores of India. The Hon ble High Court after examining the law and judicial pronouncement held that it would emerge that assessee was working outside India for a period of 225 days and the income in question earned by assessee has not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced on record to show that the payment was towards the business of the assessee. 8. We have heard the rival submissions perused the material available on record and gone through the orders of the authorities below. The ld.CIT(A) had confirmed the disallowance by observing as under: 5.2 I have considered the submissions. Except for payment to QCS, all other payments are claimed to be made on behalf of other parties, which due to non payment by the said parties, were written off. In view of this, the claim is not of bad debts u/s 36(l)(vii) but is of business loss . Appellant has not been able to file any evidence in support of the said amounts being genuine business debts. In view of this, claim totaling to ₹ 5,58,683/-i.e. after excluding QCS cannot be allowed. In respect of claim towards QCS, there is no proof of transaction having been made towards appellant s business, as admittedly, no invoice is there. In this situation, claim of ₹ 1,52,837/- as loss also could not be allowed. To sum up, disallowance of ₹ 6,84,520/- is confirmed. However, the submissions before the CIT(A) were as under: The learned AO has dealt with the issue vide para 6 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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