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TMI Blog2021 (12) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Tribunal for which necessary petition for condonation of delay along with affidavit has been filed explaining the reasons for delay in filing the appeals. The ld.DR further submitted that the order of the learned CIT(A) vide ITA Nos. 102 & 101/2005-06, 102 & 101/2006-07, 100/2007-08 & 210/2010-11 was received on 07.02.2017. The Revenue has filed appeals before this tribunal on 11.04.2017. However, due date for filing appeals falls on 08.04.2017 being Saturday, next working day will be Monday i.e., 10.04.2017, and further submitted that as the appeals have to be filed for four assessment years, the delay is due to non-availability of records. As soon as the records were traced, appeal papers were prepared and the same was submitted with a delay of 3 days and prayed for condonation of delay. The Ld. AR opposed condonation of delay. Having heard both sides, we are of the considered view that reasons given by the assessee for not filing the appeals within the time allowed under the Act comes under reasonable cause as provided under the Act for condonation of delay and hence, delay in filing of above appeals are condoned and appeals filed by the Revenue are admitted for adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old the findings of the Ld. CIT(A) and reject the ground taken by the Revenue. 7. The next issue that came up for consideration from ground no. 3 of Revenue appeal is disallowance of sales promotion expenses. The facts with regard to the impugned dispute are that the assessee has claimed deferred revenue expenditure of Rs. 4,87,325/- being 1/5th of total expenditure incurred for marketing expenses for product launch at Rs. 25,09,897/-. The AO has disallowed deferred revenue expenditure on the ground that, except as provided for amortization of expenses u/s. 35D, 35DD etc, no deduction can be allowed to other expenses. Before the Ld. CIT(A), assessee had made alternate plea and argued that in case the earlier expenditure cannot be allowed as deduction then expenditure incurred during the relevant financial year should be allowed in full because the same is incurred wholly and exclusively for the business of the assessee. The Ld. CIT(A) rejected arguments of the assessee towards amortization of deferred revenue expenditure pertains to financial year 19992000 relevant to assessment year 2000-01. However, allowed total expenditure incurred for the assessment year 2000-01 by holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usively incurred for the purpose of business, then the same needs to be allowed as deduction as and when such expenditure has been incurred for the purpose of business. To this extent, we do not find any infirmity in the findings recorded by the Ld. CIT(A). As regard the ground taken by the Revenue in light of the decision of the Hon'ble Supreme Court in the case of Goetz India Ltd, (supra), we are of the considered view that restrictions imposed by the Hon'ble Supreme Court on the powers of Assessing Officer does not extend to the powers of appellant authority. The appellant authority itself entitles to admit any new claim even though such claim was not made before the AO by filing revised return of income. Therefore, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to entertain fresh claim made by the assessee in so far as deduction of total expenditure incurred for sales promotion activities. For all these reasons, we do not find any reason to interfere with the findings recorded by the Ld. CIT(A) and hence, we reject ground taken by the Revenue. 11. The next issue that came up for consideration from ground no. 4 of Revenue appeal is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 80HHC of the Act. 14. The Ld. DR submitted that Ld. CIT(A) erred in holding that DEPB is covered under export incentives and hence, same is allowable as deduction u/s. 80HHC of the Act. The Ld. DR further submitted that the Ld. CIT(A) has erred in relying on the decision of the Hon'ble Apex Court in the case of Topman Exports vs CIT (supra) which was delivered much later than the assessment order under consideration and hence, not applicable to the instant case. 15. The Ld. AR for the assessee on the other hand supporting the order of the Ld. CIT(A) submitted that the issue is squarely covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of Topman Exports vs CIT (supra), where the Supreme Court clearly held that profit from sale of DEPB license is allowable for deduction u/s. 80HHC of the Act. 16. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of Topman Exports vs CIT (supra), where the Hon'ble Supreme Court clearly held that profit from transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the Ld. CIT(A) to delete addition made towards disallowance of employees' contribution to PF and ESI. Hence, we are inclined to uphold the finding of the Ld. CIT(A) and reject the ground taken by the Revenue. 20. The next issue that came up for consideration from ground no. 2 of Revenue appeal is exclusion of profit on sale of DEPB license for computation of deduction u/s. 80HHC of the Act. An identical issue had been considered by us in ITA No. 879/Chny/2017 for assessment year 2001-02 in preceding para no. 16 in page 12. The reasons given by us in preceding Para no. 16 shall mutatis mutandis apply to this appeal, as well. Therefore, for similar reason we are inclined to uphold the finding of the Ld. CIT(A) and reject ground taken by the Revenue. 21. In the result, the appeal filed by the Revenue in ITA No. 880/Chny/2017 for assessment year 2002-03 is dismissed. ITA No. 881/Chny/2017 for AY 2003-04: 22. The first issue that came up for consideration from ground no. 2 of Revenue appeal is exclusion of excise duty/ sales tax from total turnover for computation of deduction u/s. 80HHC of the Act. An identical issue had been considered by us in ITA No. 879/Chny/2017 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from total turnover for computation of deduction u/s. 80HHC of the Act. An identical issue had been considered by us in ITA No. 879/Chny/2017 for assessment year 2001-02 in preceding para no. 12 in page 10. The reasons given by us in preceding Para no. 12 shall mutatis mutandis apply to this appeal, as well. Therefore, for similar reason we are inclined to uphold the finding of the Ld. CIT(A) and reject ground taken by the Revenue. 27. The next issue that came up for consideration from ground no. 3 of Revenue appeal is exclusion of forex gain for the purpose of computation of deduction u/s. 80HHC of the Act. The AO has excluded foreign exchange gain arising from export sales as treasury income and has no direct nexus with the business of the undertaking. The Ld. CIT(A) has allowed relief to the assessee by relying on the decision of the Bombay High Court in the case of CIT vs Amber Exports (India) (326 ITR 455) (Bom.) by holding that exchange rate difference pertains to exports made in earlier years is part of sale proceeds relatable to export and eligible for deduction u/s. 80HHC of the Act. 28. We have heard both the parties, perused materials available on record and gone thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee proves that the loans are neither bad nor written off by the assessee, or change in terms and conditions of sanction of loan to sister concern. Therefore, he has worked out interest @ 9% and added back to the total income. 31. Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee reiterated its arguments made before the AO and submitted that there is an uncertainty in respect of interest on loans, due to adverse business conditions and hence, no interest has been accounted in books of accounts for the assessment years 2010-11 to 2012-13. The Ld. CIT(A) after considering relevant submissions of the assessee and also by following certain judicial precedents including the decision of Hon'ble Rajasthan High Court in the case of Jaipur Electro (P) Ltd vs CIT (1997) 223 ITR 535 (Raj), upheld additions made by the AO towards estimation of interest on loans advanced. The relevant findings of the Ld CIT(A) are under: "4.2. Interest Income A.Ys. 2010-11 to 2012-13) The Assessing Officer observes that the appellant has been consistently disclosing interest income from a loan advanced to its sister c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purposes of his business, is to be allowed. There con hardly be any dispute on the proposition that the businessman is the best Judge to determine the business expediency and, therefore, when he claims to have incurred a certain expenditure for business expediency, his version should ordinarily be accepted. This principle, however, does not debar the assessing authorities to enquire and investigate as to whether such expenditure was actually incurred by the businessman and if incurred whether the sonic was incurred wholly and exclusively for business consideration. The doctrine that the businessman is the best Judge of business expenditure does not affect the right, nay, duty of the assessing authorities to know whether it was incurred for business purposes and not for other extraneous considerations, In 'view of the above, I am unable to agree with the contention of the appellant that the no interest income in a real sense has accrued to the appellant. Therefore, the interest income estimated by the Assessing Officer for the A.Ys. 2010-41 to 2012- 13 is sustained. The appellant fails on this ground." 32. The Ld. AR for the assessee submitted that the Ld. CIT(A) erred in sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case laws relied upon by the assessee including Hon'ble Supreme Court in the case of Godhra Electric Supplu Co Ltd vs CIT (supra) we find that those case laws are rendered under different set of facts and has no application to facts of present case. The Ld. CIT(A) after considering relevant facts has rightly confirmed additions made by the AO towards estimation of interest on loans given to sister concern. Hence, we are inclined to uphold the finding of the ld. CIT(A) and reject the ground taken by the assessee for the assessment years 2010-11 to 2012-13. 35. In the result, the appeals filed by the assessee in ITA Nos. 1257, 1258 & 1259/Chny/2017 for assessment years 2010-11 to 2012-13 are dismissed. 36. The next issue that came up for consideration from ground no. 1 of Revenue appeal for assessment year 2010-11 to 2012-13 is disallowance of foreign agency commission u/s. 40(a)(i) of the Act, for non deduction of tax at source u/s. 195 of the Act. The AO has disallowed export commission paid to foreign agency u/s. 40(a)(i) of the Act, for non-deduction of tax at source u/s. 195 of the Act, by holding that as per definition of section 9 of the Income Tax Act, commission falls unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical issue and held that commission paid to non-resident agent will not fall within the definition of fees for technical services, when the non-resident agent was engaged by the assessee to procure export orders and paid commission for such services. The Hon'ble Supreme Court in the case of Transmission Corporation of Andhra Pradesh vs CIT 239 ITR 587 (SC), held that any person making payment to a nonresident would be liable to deduct tax only when the payment so made is chargeable to tax under the Income Tax Act. The Hon'ble Apex Court, in another decision in the case of GE India Technology Centre Pvt. Ltd. vs CIT 327 ITR 426 (SC), held that if payment made to non-resident is not taxable in India, then, no tax is to be deducted u/s. 195 of the Act. In this case, on perusal of facts available on record, it was very clear that commission paid by the assessee to non-resident for procuring export orders is neither accrued in India nor taxable u/s. 9 of the Act as fees for technical services. Further, the business profits of a non-resident cannot be taxed in India unless such non-resident have permanent establishment in India. It was not the case of the AO that foreign agents have perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 8D for the assessment years 2011-12 & 2012-13, respectively. It was the contention of the assessee that when there is no dividend income earned for the relevant assessment year, then no disallowance could be made in respect of expenditure relatable to said exempt income. 41. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The ld. CIT(A) has recorded categorical findings that the assessee had not earned exempt income for both assessment years. The Ld. CIT(A) further noted that there is no exempt income for relevant assessment year, then no disallowance can be made in respect of expenditure relatable to said exempt income. The findings recorded by the Ld. CIT(A) was supported by the decision of Hon'ble Madras High Court in the case of Redington (India) Ltd vs Addl. CIT (97 CCH 219). It was further supported by the decision of the Hon'ble Supreme Court in the case of CIT vs Chettinad Logistics (2018) 102 CCH 180. The sum and substance of the ratios laid down by Hon'ble High Court and Hon'ble Supreme Court are that section 14A of the Act can only be triggered, if the assessee seeks to square off expenditure aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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