TMI Blog2015 (1) TMI 1445X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Hon ble Delhi High Court in the case of EKL Appliances [2012 (4) TMI 346 - DELHI HIGH COURT ] We also find that the assessee has made the same plea before the CIT(A) and has also filed the above details and documents but the CIT(A) also has neither called for a remand report nor has verified the genuineness or reasonableness of the payment made by the assessee to its AE but has only confirmed the addition made by the AO by further holding that the said payment is chargeable to tax in India and since the assessee has failed to deduct tax at source, the disallowance u/s 40(a)(i) is called for. This, in our view, is not justified without verification of facts. In view of the same, we deem it fit and proper to reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C are consequential in nature and therefore the AO is directed to give consequential relief to the assessee, if any. - ITA No.20/Bang/2014 - - - Dated:- 30-1-2015 - Smt. P. Madhavi Devi, Judicial Member And Shri Abraham P George, Accountant Member Appellant by: Shri Ajay Rotti, CA. Respondent by: Shri P.Dhivahar, JCIT(DR). ORDER Smt. P.Madhavi Devi, JM: This is an appeal filed by the assessee against the order of the CIT(A)-I, Bangalore, dated 27/09/2013 for the assessment year 2010-11. 2. The assessee is aggrieved by the order of the CIT(A) confirming the disallowances made by the Assessing Officer (AO) of : i. business service charges paid by the assessee to M/s.Eka Software Solutions Inc.; ii. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on expenses/lease rent charges incurred by the assessee from only the export turnover and brought it to tax. 4. Aggrieved by these disallowances and the consequential additions, the assessee filed an appeal before the CIT(A) who confirmed the order of the AO. However, as regards the computation of deduction u/s 10A of the Act, the CIT(A) directed the AO to reduce tele-communication expenses both from the export turnover as well as total turnover. As regards the disallowance of marketing charges paid to Eka Solutions, USA, the CIT(A), in addition to confirming the addition, has also held that the same is to be disallowed u/s 40(a)(i) of the Act since assessee has not applied the provisions of sec.195 of the Act. Against these findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, according to him, both the authorities below have made disallowances without proper appreciation of facts and material on record. 5.1 As regards the reduction of tele-communication charges from the export turnover is concerned, the learned counsel for the assessee submitted that they are not to be reduced from the export turnover as these expenses are incurred for export of software. However, since the CIT(A) has followed the decision of the Hon ble Karnataka High Court in directing for exclusion of the same from the total turnover also, the learned counsel submitted that the assessee does not wish to press the same seriously. As regards the deduction u/s 10A is concerned, the learned counsel for the assessee submitted that the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that any expenditure incurred by him for the purpose of business carried on by him has actually resulted in profit or income either in the same year or in any of the subsequent years. The only condition is that the expenditure should have been incurred wholly and exclusively for the purpose of business and nothing more. It is this principle that inter alia finds expression in the OECD guidelines, in the paragraphs which we have quoted above. 22. Even Rule 10B(1)(a) does not authorize disallowance of any expenditure on the ground that it was not necessary or prudent for the assessee to have incurred the same or that in the view of the Revenue the expenditure was unremunerative or that in view of the continued losses suffered by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled for a remand report nor has verified the genuineness or reasonableness of the payment made by the assessee to its AE but has only confirmed the addition made by the AO by further holding that the said payment is chargeable to tax in India and since the assessee has failed to deduct tax at source, the disallowance u/s 40(a)(i) is called for. This, in our view, is not justified without verification of facts. In view of the same, we deem it fit and proper to remand the issues to the file of the AO for de novo consideration of the issue as regards the genuineness and also the reasonableness of the expenditure claimed by the assessee. It is made clear that the AO cannot make disallowance on the ground that the assessee has not generated rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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