TMI Blog2022 (10) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... mount. TDS u/s 195 - addition for violation of section 115QA - HELD THAT:- CIT(A) s divergent view is related to application of section 115 QA. Since section 115QA was introduced in statute by Finance Act, 2013 with effect from 1-6-2013, payment made by assessee on account of purchase of its own shares prior to 1-6-2013 could not be termed as dividend as per provisions of section 115QA. The fact that section 115QA was not applicable to appellant company as the payment is related to FY 12-13. The order of CIT(A) is ruled out for wrong ascertaining fact against the assessee. Mr Dileep Raghu Nath is a NRI and a resident of Singapore and accordingly the provision of DTAA article 13, applied to him. As per the provisions of Indo Singapore DTAA jurisdiction for taxing the capital gains arising in the hands of Mr. Dileep Raghu Nath is in Singapore and not in India. Therefore, the application of section 195 is not applicable for assessee-company. Accordingly, the addition for violation of section 40(a)(ia) read with section 195 amount is quashed. Decided in favour of assessee. - I.T.A. No. 7320/Mum/2019 - - - Dated:- 27-10-2022 - Shri Pramod Kumar, Vice President And Sh. Anikes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was provided during appellate proceedings to validate the same, when in fact there was no specific reference made by the learned CIT(A) to provide any proof of these expenses. Ground No. 3 - Deduction of Rs.6,63,064/- u/s 57(iii): 1) The learned CIT(A) erred in confirming disallowance u/s 57(iii) of Rs.6,63,064/-. 2) The learned CIT(A) failed to consider that the claim of deduction of Rs.36,68,051/- was restricted to 21.35%, being an amount proportionate to the percentage of interest income earned from total revenue during the year, i.e., Rs.53,36,565/- (21% of Rs.2,61,96,06/-). 3) The learned CIT(A) failed to consider that the interest expenditure being claimed against interest income was accrued interest paid to vendors from whom Non-Cumulative Debentures were purchased. The same was claimed in the profit and loss account as a deduction against the interest income earned from the said debentures. 4) Without prejudice, the learned CIT(A) erred in making a finding that no TDS was deducted in respect to these interest payments, when in fact there was no requirement to do so, since it should be allowed as a deduction in the year in which Interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness income of assessee. 2.1. Ground No. 2 was not pressed by the ld. Counsel. 2.2. In Ground No.3, the assessee earned a revenue of Rs. 2,61,96,086/-, out of which interest income was 53,36,565/- which is worked @21% of total revenue of the year. Accordingly, assessee claimed proportionate deduction @21.35% on total expenses amount to Rs. 1,71,80,568/- which is worked out amount to Rs. 36,68,051/- u/s 57(iii). As per appellate authority, appellant voluntarily disallowed expenses U/s 14A amount to Rs 30,04,987/-. As per the assessee the claim is restricted to 663,064 effectively. But, as per observation of the ld. CIT(A) there is no deduction of TDS on payment of interest amount to Rs. 613,789/- which is liable to be disallowed U/s 40(a)(ia) of the Act. The prayer of the assessee is that the expenses should be restricted to @ 21.35% of Rs. 663,064/- which is calculated to Rs. 141,564/-. 2.3. In the next issue, the assessee bought back shares from non-residential shareholder, Mr. Dileep Raghu Nath, who was a resident of Singapore, and as per the double taxation avoidance agreement (DTAA) between India and Singapore, Article 13 specifically provides that capital gains aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of appellate proceedings, the appellant filed copies of ITR, computation of income, financial statements and ledger accounts of current year losses. The appellant stated that though the income computed by stands at Rs 3979678/- being income from other sources while uploading the Return of Income on the IT website, the system has of its own accord calculated current years expenses as Business loss and adjusted the same against current year gains and the appellant has paid adequate taxes by way of TDS and Advance taxes. It is seen from profit and loss account that the assessee has claimed Rs 21291616/- of total administrative expenses and the assessee claimed the said loss is attributable to income of dividend income. I am not in agreement with' the submissions of the assessee for the reason that the assessee is aware of reporting the business loss in return of income but failed to revise the return of income. If the expenses are attributable to earning exempt income, it should not have been claimed in the profit and loss account or if claimed, it should have been disallowed in return of income. If the expenses incurred for earning exempt income are treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.4 is extracted below: 3.4 Against above order assessee is in appeal before us. We have heard both the counsel and perused the records. Lt. Counsel of the assessee submitted that this tribunal in assessee s own case in ITA No. 8870/Mum/2011 and 8699/Mum/2011 for assessment year 2008-09 has decided the same issue in favour of the assessee vide order dated 14.01.2015. Furthermore Ld. Counsel of the assessee submitted that assessee is engaging into the investment activity through PMS (portfolio management services). Ld. Counsel submitted that in such cases Hon'ble High Courts have decided that investment activity engaged through PMS transactions cannot be treated as trading activity. For this proposition Ld. Counsel placed reliance upon Hon'ble Delhi High Court decision in ITA 485/2012 in the case of Radials International vs. ACIT vide order dated 25.04.2014. Per contra Ld. DR relied orders of the authorities below. He further submitted that it is also not clear from the order, of the A.O that assessee is engaging into the investment activity through portfolio management services. 3.2. The ld. CIT(A) DR only relied on the order of the revenue authorities and no cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company as per the provisions of section 40a(i) rws 195 of the I.T.Act and added to the total income of the assessee. Penalty proceedings u/s.271(1)(c) are initiated for furnishing inaccurate particulars of income. 5.1 He further argued that the assessee company has accumulated profit from earlier year i.e. F.Y. 2006-07 as on 31.03.2007 an amount of Rs.52,05,02,707/- and it was grown to Rs.80,05,02,707/- as on 31.03.2010. When there was buy back 1250 shares for Rs.19,98,75,000/- during the F.Y. 2010-11. Again, there was buy back of 324 shares during the F.Y. 2011-12. The assessee bought back 840 shares from Mr. Dileep Raghu Nath who is a non-resident of India and paid amount of Rs.15,34,68,000/-. The capital gain was earned by Mr. Dileep Raghu Nath amount of Rs.15,15,81,802/- and claimed as exempted vide Article-1 of the Protocol dated 29.06.2005 read with Article 13 of DTAA dated 24.01.1994 with Singapore. The tax on the ground will be paid in Singapore. There is no such provision to deduction of tax on this amount as per the DTAA. The demand of the AO is wrong, and assessee is not liable to pay deduct tax u/s 195 of the Act in India. So, there is no violation of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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