TMI Blog2011 (12) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT(A) is contrary to law and facts of the case. 2) The learned CIT(A) has erred in deleting the disallowance made u/s 40(a)(i). 2.1) Having regard to the retrospective amendment brought into the Act by the Finance Act, 2010 by way of Explanation to sec.9(1) the learned CIT(A) ought to have upheld the disallowance made by the assessing officer. 2.2) The learned CIT(A) failed to note that in the light of the above amendment, the decision of the Hon'ble Supreme Court relied upon viz. in the case of GE Indian Technology Centre is distinguishable to the facts of this case. 2.3) It is submitted that in the absence of exemption certificate from the TDS wing of the Department, the decision of the Hon'ble Supreme Court in the case of Transmission Corporation of India Ltd. (239 ITR 589) is applicable to the present case and hence the learned CIT(A) ought to have upheld the disallowance made by the assessing officer. 3) The learned CIT(A) has erred in holding that the assessing officer should rework the deduction u/s.80-IA without setting off losses on notional basis. 3.1) Having regard to the provisions of section 80-IA(5) the learned CIT(A) ought to have up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a sum of ₹ 87,36,000/-. 6.1) Having regard to the binding jurisdictional High Court's decision in the case of South India Surgical Co. Ltd. (153 Taxmann 491) the learned CIT(A) ought to have upheld the action of the assessing officer as the debtors here are all Government companies only. 6.2) It is further submitted that the decision of the Supreme Court in the case of TRF Ltd. (323 ITR 397) cannot be applied here since the said decision did not deal with dues from the Government / Government companies. 7) For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing officer restored. 4. We have heard the rival submissions and have circumspected the entire record. The first issue relates to disallowance under section 40(a)(i) of the Act. 5. The facts apropos this issue are that the assessee company has debited a sum of ₹ 87,72,280/- as Commission Discount Exports, vide Schedule 18(E) of the Profit and Loss Account for the year ended 31.03.2007. When asked to furnish the details regarding tax deduction at source on the above payments of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance u/s 40(a)(i) of the I.T. Act is deleted. This ground of appeal is allowed. 6. Before, us, it was contended that the issue stands covered in favour of the assessee by the decision of the Tribunal decided in its favour in assessee s own case for the assessment year 2006-07 while deciding ITA No. 554/Mds/2011 dated 30.06.2011. The Tribunal has explained this issue and gave its finding in para 8 of its order, which is being extracted herein below: 8. We have perused the orders of authorities below and heard the rival contentions. There is no doubt that assessee had paid the commission to overseas parties and there is also no dispute that such overseas agents had no PE in India. There is no dispute also that such overseas agents rendered services outside India for procuring export orders. Amendment harped on by the Revenue in Section 9(1) of the Act may be substitution of Explanation coming under sub-section (2) of Sec.9 by Finance Act, 2010 with retrospective effect on 01.06.1976. This is the only amendment made in Sec.9 by Finance Act, 2010. Such substituted explanation reads as under:- Explanation- For the removal of doubts, it is hereby declared that for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find that this issue is already decided by the jurisdictional High Court in the case of Velayudhaswamy Spinning Mills Ltd., ( 231 CTR 368). Their Lordship held at para-13 of the order as under:- 13. Sec.80-IA reads as follows: 33[(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years.] (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park 34[or develops 35[***] a special economic zone referred to in clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Years out of 15 years. Option has to be exercised. If it is not exercised, the assessee will not be getting the benefit. Fifteen years is outer limit and the same is beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure activity etc. Sub-s(5) deals with quantum of deduction for an eligible business. The words initial assessment year are used in sub-s(5) and the same is not defined under the provisions. It is to noted that initial assessment year employed in sub-s(5) is different from the words beginning from the year referred to in sub-s(2) Important factors are to be noted in subs( 5) and they are as under:- (1) It starts with non obstante clause which means it overrides all the provisions of the Act and other provisions are to be ignored. (2) It is for the purpose of determining the quantum of deduction; (3) For the Assessment Year immediately succeeding the initial Assessment Year; (4) It is a deeming provision; (5) Fiction created that the eligible business is the only source of income; and (6) During the previous year relevant to the initial assessment year and every subsequent assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 13. Because the assessee was not able to produce all the invoice of the delivery challan and lorry receipts in respect of branch sales and export sales, the Assessing Officer has held that these are to be taken as sales reported and the same is added to the total income. On account of difference between the sales ledger and invoice raised amounting to ₹ 17,94,93,705/- was added. 14. This addition has been deleted by the ld. CIT(A) on the premise that there is no statement or omission of the sales by the assessee. The accounts of the assessee company are subjected to CAG audit. The accounts are also subjected to Government audit under section 619(4) of the Companies Act, 1956. It has been observed that since no comments had been made by the CAG after compilation of the audit, there cannot be any suppression of sales. But, on behalf of the Department, it was argued that the assessee company has shown a NIL stock of finished goods, which is practically impossible in a manufacturing company and there should be some stock of finished goods as on 31.03.2007 because there was an uninterrupted power consumption and continuous production. The ld. CIT(A) gave a categorical find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1956 NIL comment 'was also issued by CAG after completion of audit of the account for the subject assessment year. The appellant is being regularly subjected to inspection and verification by authorities like Excise, VAT etc. Therefore, the addition of ₹ 4,45,67,775/- made by the AO on presumptive basis is not correct and is accordingly, deleted. This ground of appeal is allowed. 20. Accordingly, both these additions have been correctly deleted by the ld. CIT(A). Consequently, ground No. 4 and 5 of this appeal stand dismissed. 21. The last ground i.e. ground No. 6 relates to bad debt and deleted by the ld. CIT(A). 22. The Assessing Officer has disallowed the bad debt amounting to ₹ 87,36,000/-. The details and status of the debts were produced and have been written off as irrecoverable as per the provisions of section 36(1)(vii) of the Act in the books of accounts of the assessee. There is no dispute on this fact. After01.04.1989, w.e.f. assessment year 1989-90, there is no requirement by the assessee to prove that the debt has actually become bad. Therefore, this issue is decided in favour of the assessee. To support our view, we may mention the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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