TMI Blog2022 (3) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... dictum laid down by the Hon ble jurisdictional High Court in the case of CIT v. Micro Labs Limited [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] , no disallowance of interest u/s 14A r.w.r. 8D(2)(ii) is called for and we delete the same. Disallowance u/s 14A r.w.r. 8D(2)(iii) - AR took us to the various types of expenses incurred by the assessee and submitted that most of the expenses are not related to the earning of exempt income. It was submitted that the issue may be restored to the files of the A.O. to re-determine the disallowance by excluding the value of investment which did not yield exempt income while computing average value of investments, as per order of ACIT v. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] - DR did not have objection to the above submission of the learned AR. Therefore, we set aside the order passed by the CIT(A), as regards the disallowance u/s 14A r.w.rule 8D(2)(iii) of the I.T.Rules and restore the matter to the files of the A.O. Deduction u/s 10A - deduct telecommunication expenses incurred in foreign currency from total turnover and from export turnover - HELD THAT:- Hon ble Apex Court in the case of HCL Technologies Ltd.[ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no specific adjudication is called for, hence, the same is dismissed. Grounds 6, 7 and 8 are consequential, hence, the same are dismissed. The learned AR during the course of hearing did not press grounds 3 and 5, hence, the same are dismissed. The surviving grounds, namely, grounds 2 and 4 reads as follows:- 2. Provision for warranty expenses. 2.1 On the facts and in the circumstances of the case, the ld.CIT(A) grossly erred in law and in fact in confirming the disallowance made by the Assessing Officer (AO) with respect to provision for warranty expenses of ₹ 300,726,000 which was made on the basis of past experience and on a scientific basis. 2.2 On the facts and circumstances of the case, the ld.CIT(A) erred in law and facts in not following the favourable judicial precedent of the Hon ble jurisdictional Tribunal in appellant s own case for A.Y. 1996-97. 4. Disallowance under section 14A of the Act, read with Rule 8D of the Income Tax Rules, 1962 (Rules). 4.1 On the facts and in the circumstances of the case, the ld.CIT9A) erred in sustaining disallowance made by the AO of ₹ 9,304,441 under section 14A of the Act by applying the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the facts, it is seen that the assessee is under contractual obligation to provide warranty to their customers. The assessee has provided warranty on the supplies made. The liability to pay for warranty claim arises no sooner sales is effected. Therefore, the assessee had provided for liability on the basis of sales made during the year. Though exact amount cannot be quantified, however, the same is based on scientific approach and based on past experience. 3. At the time of hearing, the learned DR relied on the decision of the Madras High Court in the case of CIT v. Rotork Controls India Ltd. Others (293 ITR 311). In the aforesaid decision, as there was no evidence of actual expenditure in prior years, the provision was concluded as not deductible. Facts are different in the present case. The learned CIT(A) has considered the details meticulously and then granted relief to the assessee. After going through the facts of the case, we do not find any infirmity in the order of the learned CIT(A) granting relief to the assessee as the provision was made on the sales effected during that year. It is ordered accordingly. 4.3 In view of the co-ordinate Bench order of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 14A r.w.r. 8D(2)(iii) is concerned, the A.O. had made disallowance amounting to ₹ 81,74,160. At the time of hearing, the learned AR took us to the various types of expenses incurred by the assessee and submitted that most of the expenses are not related to the earning of exempt income. It was submitted that the issue may be restored to the files of the A.O. to re-determine the disallowance by excluding the value of investment which did not yield exempt income while computing average value of investments, as per order of Special Bench in the case of ACIT v. Vireet Investment Pvt. Ltd. (supra). The learned DR did not have objection to the above submission of the learned AR. Therefore, we set aside the order passed by the CIT(A), as regards the disallowance u/s 14A r.w.rule 8D(2)(iii) of the I.T.Rules and restore the matter to the files of the A.O. The A.O. is directed to follow the ratio of the decision rendered by the Special Bench in case of ACIT v. Vireet Investment Pvt. Ltd. (supra). It is ordered accordingly. 6. In the result, the appeal filed by the assessee is partly allowed. ITA No.1837/Bang/2013 (Revenue s appeal) 7. Five grounds are raised in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee as foreign commission refer to the commission paid by the assessee to persons outside India. The amount is liable for tax deduction at source as per the provisions of Chapter XVII B of the I.T.Act. Since the assessee has failed to deduct the tax at source, the amount is disallowed u/s 40(a)(i) of the I.T.Act. It is further verified that the amount has not been disallowed by the assessee in the statement of total income submitted during the assessment proceedings. In the result, the amount of ₹ 4,29,93,593/- is disallowed u/s 40(a) added back to the total amount of the assessee (Addition ₹ 4,29,93,593/-). 9.1 The CIT(A), on further appeal, granted partial relief. The CIT(A) directed the A.O. to delete the disallowance made on cash disallowance by holding that cash discount by its very nature is not liable for TDS as amount is given as reduction in invoice for prompt payment. 9.2 The learned Standing Counsel s limited prayer is that the matter needs to be restored to the A.O., since the CIT(A) decided the issue in favour of the assessee by admitting additional evidence and without giving the A.O. an opportunity to examine the additional evidence. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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