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ITO Ward-1 (4) New Delhi Versus Annik Technology Systems (P) Ltd.

2016 (11) TMI 253 - ITAT DELHI

TDS u/s 195 - Disallowance of expenses - no particulars were filed in respect of the lease rentals paid, the legal and professional cost and travel cost were in the nature of provision and no TDS has been made in respect of the selling cost - Held that:- 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 .....

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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 assessee and the voluminous details filed as part of the remand proceeding. The AO has also not been able t .....

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/06/2012 passed by CIT(A)-IV, New Delhi. 2. The grounds of appeal are as follows:- 1. The Ld.CIT(A) has erred on facts in law treating the facts of earlier years and the year under consideration as the same. 2. The Ld.CIT(A) has erred on facts and in law in deleting the addition of ₹ 63,82,442/- on a/c of lease rental paid even though it was a provision debited to P & L a/c. 3. The Ld.CIT(A) has erred on facts and in law in deleting the addition of ₹ 11,11,500/- on a/c of Legal & .....

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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 .....

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,217/- as per the Computation of Taxable Income filed during the course of assessment proceedings. Notices u/s 142(1) dated 8/1/2011, 25/2/2011, and 15/12/2011 were issued during the course of assessment proceedings requiring the assessee company to file the details/evidences etc. as called for therein. The Authorized Representative of the assessee company filed details in parts during assessment proceedings. 4. As regards the lease rental, an amount of ₹ 63,82,442/- towards lease rental p .....

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e profits as peer Computation of Taxable Income was added to the declared income. 5. 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 p .....

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provision, same was disallowed and added to the income of the assessee company. 7. As regards the selling cost, the Assessing Officer observed that the details of Selling Cost of ₹ 1,17,85,481/- filed by the AR of the assessee company vide letter dated 13/12/2011 revealed that tax has not been Deducted at Source under the provisions of Chapter XVII of the Income Tax Act, from the amounts of certain consultancy/Marketing Support charges paid/credit to the recipients. The details of persons/ .....

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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 r .....

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st were in the nature of provision 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 ap .....

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here 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. 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 .....

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the CIT(A). 10. The Ld. AR submitted that there was an application for admitting additional evidence under Rule 46A of the Income tax Rules, 1962 filed by the assessee before the CIT(A). The same was heard after calling for remand report by the CIT(A) and admitted the additional evidence. The Assessing Officer was cryptic in his order and the questionnaire put up during the assessment proceedings were also not specific as to produce the additional documents, therefore, the assessee when the appe .....

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the materials available on record. The additional evidence was supplied to the Assessing Officer and remand report was called for and after going through the remand report. The CIT(A) has given its correct finding in Para 9.2. The AO has made the impugned disallowances on the ground that no particulars were filed in respect of the lease rentals paid, the legal and professional cost and travel cost were in the nature of provision and no TDS has been made in respect of the selling cost. In this r .....

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