TMI Blog2016 (11) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... longwith copies of agreements and invoices. It is argued that the payments made to the said non-resident parties were for the purpose of marketing and consultancy services rendered outside India and the said payments were not exigible to tax deduction at source u/s 195 of the Act as there was no income accruing or arising in India in the hands of the said non-resident parties in view of Section 9(1)(vii) of the Act read with Section 90(2) and the treaty provisions as per the India-USA DTAA. Thus the finding of the CIT(A) that the AO has completely misconstrued the facts and legal provisions with regard to the above additions is correct. The AO has also not given any adverse material observation whatsoever against the above submission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,17,85,481/- on a/c of selling cost amount even though it was a provision debited to P La/.c. 6. The Ld.CIT(A) has erred on facts and in law in accepting the evidence in violation of ₹ 46A of the IT Act, 1961. 7. Even though the A.O agreed that the payments have been made in the next year and TDS deducted there on and in directing the ITO and allow the expenses during this year. 3. The assessee company is a Service sector BPO and IT enabled services provider, engaged in the development of computer software and IT enabled projects in back office operations and data processing. Net profit of ₹ 5,40,93,552/- has been declared form the Service income receipts and other income aggregating to ₹ 34,04,33,406/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As regards the Legal and Professional Cost, the Assessing Officer observed that from the perusal of details of Legal Professional cost of ₹ 91,18,881/- filed by the AR of the assessee company vide letter dated 13/12/2011 revealed that there is a provision of ₹ 11,11,500/- bearing no particulars. Since the amount of ₹ 11,11,500/- does not represents any actual expenditure and is merely a provision, same is, therefore, disallowed and added to the income of the assessee company by the Assessing Officer. 6. As regards the travel cost, the Assessing Officer observed that from the perusal of details of Travel cost of ₹ 2,13,26,562/- filed by the AR of the assessee company vide letter dated 13/12/2011 revealed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the above mentioned persons in contravention of Provisions of Section 40(a) (ia) of the Income Tax Act, were disallowed and added to the income of the assessee company. 8. The CIT(A) while deciding the case held in Para 9.2 as under:- 9.2 I have carefully considered the assessment order and the submissions made by the Id. AR on the above issues as well as the documents placed on record as part of the paper book. At the outset, I find that the above grounds are academic in nature since the appellant would be entitled to deduction u/s 10A in respect of its entire assessed income inclusive of the above disallowances. However, for the sake of clarity, I would like to adjudicate on the above grounds. Perusal of the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the India-USA DTAA. On careful consideration of the matter, I find that the AO has completely misconstrued the facts and legal provisions with regard to the above additions. The AO has also not given any adverse material observation whatsoever against the above submission of the appellant and the voluminous details filed as part of the remand proceeding. The AO has also not been able to make out any case for TDS u/s 195 in the case of selling cost. In view of the above, the impugned additions made by the AO in a casual manner cannot be sustained either in facts or in law. The same are therefore deleted and the above grounds of appeal are allowed. 9. The Ld. DR relied on the A.O s order. The Ld. DR submitted that the CIT(A) erred in ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion and no TDS has been made in respect of the selling cost. In this regard, it is argued by the Id. AR that the AO never asked for the specific details of expenses and the above expenses were actually incurred during the year under consideration and were not in the nature of provision. The Id. AR has filed voluminous documents and details as part of the paper book evidencing that the above expenses were actually incurred and the same were for the purpose of the assessee s business. Similarly, with regard to the selling cost the Ld. AR has filed exhaustive details with regard to the payments made to various non-resident parties and the services rendered by the said parties alongwith copies of agreements and invoices. It is argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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