TMI Blog2018 (2) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... rer, he steps into the shoes of the principal. Accordingly, provisions of Section 172 of the Act shall apply and those of sections 194C and 195 - Decided against revenue Disallowance u/s 14A r.w.r. 8D - Held that:- No disallowance under section 14A was suo motu made by the assessee nor it was the case of the assessee before the Assessing Officer that no expenditure was incurred by it for earning the exempt income. AO, in our opinion, therefore, was not required to record any satisfaction as contemplated in section 14A before making a disallowance under the said provision. We, therefore, find no merit in this contention of the assessee. Merit in the alternative contention raised by the assessee that while working out the disallowance as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion paid to non-resident parties. 3. The assessee in the present case is a Company, which is mainly engaged in the business of procurement, processing and shipment of tea and jute. The return of income for the year under considerat ion was originally f i led by it on 25.09.2010 declaring loss of ₹ 2,15,95,472/-. Thereafter a revised return was f i led by the assessee-company on 27.01.2012 declaring a loss of ₹ 1,93,61,561/-. In the said return, deduction was claimed by the assessee on account of commission paid, inter alia, to Kwok Hon Chung (Hongkong) and Zornix Solutions Limited (British Virgin Islands based) amounting to ₹ 46,04,640/- and ₹ 3,57,930/- respectively. Since there was no Double Tax Avoidance Agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the same, the Revenue has preferred this appeal before the Tribunal . 5. We have heard the arguments of both the sides and also perused the relevant material available on record. The ld. D.R. has contended that the ld. CIT(Appeals) has simply fol lowed the Tribunal s order in assessee s own case for A.Y. 2007-08 to delete the disallowance made by the Assessing Officer under section 40(a)(i) wi thout considering as to whether the facts involved in assessee s own case for the year under consideration are similar to that of A.Y. 2007-08. He has also contended that even the relevant aspects of the matter are not discussed and taken into consideration by the ld. CIT(Appeals) whi le giving relief to the assessee on this issue. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed to be received in India. Income accruing/ arising or deemed to accrue/ arise in India. Section 7 9 of the Act provides the income deemed to be received AND income deemed to accrue or arise in India. As per the sect ion 9 of the Act, the above expenses for advertisement in Russia and commission payment to foreign parties/ NRI are not the income deemed to accrue or arise in India, Hence not chargeable to tax . 6. As further pointed out by the ld. counsel for the assessee, the decision rendered in A.Y. 2007-08 has been subsequently fol lowed by the Tribunal to decide a simi lar issue in favour of the assessee even in the subsequent two years, i .e. A.Y. 2008-09 and 2009-10 vide i ts order dated 20.07.2016 and 30.08.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Rule 8D of the Income Tax Rules, 1962. 9. During the year under consideration, the assessee-company had earned dividend income of ₹ 2,95,000/-, which was claimed to be exempt from tax. No disallowance on account of expenditure incurred in relation to the said exempt income, however, was offered by the assessee as required by the provisions of sect ion 14A. The Assessing Officer, therefore, worked out such expenditure at ₹ 1,24,000/- by applying Rule 8D(2)(iii) being 0.5% of the average value of investment of ₹ 2,48,00,000/- excluding the investment in overseas companies and made a disallowance to that extent under section 14A. On appeal, the ld. CIT(Appeals) confirmed the said disallowance made by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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