TMI Blog2022 (5) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... and relied on the Hon ble Supreme Court decision in the case of Woodward Governor India Pvt Ltd [ 2009 (4) TMI 4 - SUPREME COURT] TDS u/s 194A - interest paid to others . - Addition u/s 40(a)(ia) - CIT(A) has allowed the claim of the assessee - HELD THAT:- Appellant during the course of appellate proceedings have provided the details of interest paid. The same was provided during the scrutiny proceedings. AO is directed to delete the addition made on account of interest paid to others. The ground of appeal filed on this issue is hereby allowed. Disallowance of commission and brokerage paid to resident and foreign agents - A.O has made an addition irrespective of the fact that the provisions of Sec. 194A of the Act are not applicable to the foreign agents - CIT-A deleted the addition - HELD THAT:- Assessee has made two types of payments were the commission payment was paid to the agents in India for procuring the sales order and TDS has been deducted u/s 194H of the Act. The assessee has submitted the party wise details along with the ledger accounts, sample invoice, TDS certificate before the A.O. Whereas in respect of the foreign party transactions towards export commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee Company which does not prove the identity of the part' involved and genuineness of the transaction. 5. The appellant prays that the order of the CIT)A) on the above grounds be set aside and that of the AO be restored. 6. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. 2. The brief facts of the case are that the assessee is engaged in the business of trading in soaps and soap based material. The assessee filed the return of income for the A.Y 2011-12 on 27.09.2011 disclosing a total income of Rs.1,64,58,715/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with questionnaire was issued. In compliance the Ld. AR of the assessee appeared from time to time and furnished the details and the case was discussed. The Assessing officer (A.O) on perusal of the profit and loss account found that the assessee has claimed (i) the business promotion and travelling expenses of Rs.37,82,817/- and the assessee was required to submit the details and the comparative analysis with the figures of earlier year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission paid to resident Agents. Finally the A.O. has assessed the total income of Rs.42,293,390/- and similarly worked out to computation of book profits under 115JB of the Act with addition of unrealized foreign exchange loss and passed the order u/s 143(3) of the Act dated 07.03.2014. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) on the dispute issues considered the grounds of appeal, submissions of the assessee, findings of the A.O and deleted the addition of bad debts, the disallowance of foreign exchange loss and disallowance of interest paid to others. The CIT(A) also deleted the addition of commission and brokerage paid to resident and foreign agents and partly allowed the assessee appeal. Aggrieved by the order of the CIT(A), the revenue has filed an appeal before the Honble Tribunal. 4. At the time of hearing, the Ld.DR submitted that the CIT(A) has erred in granting the relief overlooking the factual details and findings of the assessing officer. The Ld.DR made submissions on the disputed issues and prayed for allowing the revenue appeal. 5. Contra, the Ld.AR supported the order of the CIT(A) and submitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as offered as income by the assessee in the respective years of sale i.e in the FY 2006-07, 2008-09, 2009-10, 2010-11 which was substantiated by the ledger accounts of the relevant debtors. Reliance is placed on following case laws: T.R.F. Limited Vs. CIT (2010) 323 ITR 397.(SC):- Prior to 1st April, 1989, every assessee had to establish, as a matter of fact, that debt advanced by the assessee had, in fact, become irrecoverable. That position got altered by deletion of the word established , which earlier existed in Section 36(1)(vii) of the Income Tax Act, 1961 ['Act', for short]. Post-ist April, 1989 the provisions of Section 36(1)(vii) read as under: 36(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28-- (i) to (vi) xxxx xxxx xxxx (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year. This position in law is well-settled. The Hon 'ble Supreme Court has stated that After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss of Rs.12,54,560/-. During scrutiny proceedings the assessee company also filed ledger account of exchange rate difference and foreign gain or loss for the period from 01.04.2010 to 31 .03.2011 as per which there was a year end loss adjustment of forex of Rs 23.15,348/- The appellant is engaged in the business of trading in soaps and soap based material. The appellant has booked the sale at the prevailing exchange rate credited in the books of account of the company. The realization of the said amount was not received by the appellant as on the date of balance sheet i.e 31.03.2011 and therefore the appellant has disclosed the said receivables in the books of account at the exchange rate as on the balance sheet date. While effecting the said entry the appellant has claimed that he suffered a loss on account of the transaction in the form of the difference in the exchange rate. Here the AO has noted that the assessee has not closed the transaction and the realization of the amount to the assessee is a future eventi.e after the balance sheet date. Actual loss or gain will be ascertained/determined after the expiry of period of contract for sale of goods and assessee may end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books in respect of losses and gains; (v) whether the method adopted by the assessee for making entries in the books both in respect of losses and gains is as per nationally accepted accounting standards; (vi) whether the system adopted by the assessee is fair and reasonable or is adopted only with a view to reducing the incidence of taxation. Similar view has also been taken in the following judgements: Pleasant Time Industries vs Department Of Income Tax I.T.A. No. 359Asr) /2010 Oil Natural Gas Corporation Ltd. Vs. DCIT (2002) 83 ITD 151 (Del) (SB) In view of the above, the addition of Rs.23,15,348/- is not justified and the AO is directed to delete the same. The ground of appeal filed on this issue is hereby allowed. The Ld. AR substantiated with the information in respect of unrealized foreign exchange loss with the ledger accounts placed at page 95 to 108 of the paper book and relied on the judicial decisions. 7. The third disputed issue being interest paid to others, the Ld.DR submitted that the CIT(A) has allowed the claim of the assessee irrespective of the fact that no TDS was deducted u/s 194A of the Act. The CIT(A) has considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fazal Sabuwala AAEPS2748D 6,938,636 693,865 3 Shehnaz Sabuwala ABFPS2753Q 764,946 76,496 4 Dimple Sabuwala AAVJPS0881L 10,329 1,033 5 Doison International ALRPS7134F 419,340 41,934 6 Interest on TDS 7,517 Total 11,42,361 1,142,186 In view of the above and on the basis of the said facts the AO is directed to delete the addition of Rs. 1,14,29,361/- made on account of interest paid to others. The ground of appeal filed on this issue is hereby allowed. 7.1 The last ground of appeal which the revenue has challenged is with respect to disallowance of commission and brokerage paid to resident and foreign agents. The A.O ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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