TaxTMI 
TaxTMI 
2014 (2) TMI 987
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.... on the ground that appellant company has incurred expenditure on foreign travelling of its dealers/sub-dealers which are in the nature of incentive/commission given to such dealers/sub-dealers on which the appellant company is liable to deduct TDS and as the TDS has not been deducted therefore the expenditure has been disallowed u/s 40 (a) (ia) of the Income Tax Act. 3 (a). The Hon'ble CIT (A) has erred in confirming the disallowance of a sum of Rs.81,00,000/- out of interest paid made by the Ld. A.O. on the alleged belief that the appellant company has given excess interest free security deposit of Rs.111100000/- to M/s Dua Engineering Works Pvt. Ltd. and has calculated pro-rata interest @ 12% thereon amounting to Rs.8100000/-." 2. ....
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....avelling expenses claimed of Rs. 11,25,000/-. While doing so, it was observed that the travelling expenses paid by the assessee to the dealers were in the nature of incentive/commission paid for purchasing certain quantity and quality of goods and that therefore, TDS was liable to be deducted thereon. The Ld. CIT (A) confirmed the addition, observing that the assessee had paid incentives/commission to its dealers, which had been debited in the Profits & Loss Account under the head of foreign travel expenses; that therefore, the expenses had been claimed under the garb of foreign travel expenses, whereas there is nothing other than incentive/commission; that this fact was evident since the higher sales achieved by the dealers would result....
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....y has appreciated the controversy in right perspective as discernible in the findings extracted supra. Hence, we do not find any merit in this ground of appeal. It is rejected." 8. There being no difference in the facts for the present year, as compared to those for Assessment Year 2008-09, respectfully following the Tribunal Order, this ground of appeal is accepted. 9. So far as regards the issue of disallowance of Rs. 81 lacs out of interest paid, while making the disallowance, the Assessing Officer observed that the assessee had acquired a premises from M/s Dua Engineering Works Pvt. Ltd. on rent; that the said person was a person covered under the provisions of Section 40A(2)(b) of the IT Act, being a related party; that during th....
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....he assessee's own case for Assessment Year 2008-09. The Ld. DR has again placed reliance on the impugned order. Here, it is seen that the Tribunal, deciding the issue in favour of the assessee, has held as follows under similar facts and circumstances:- "15. We have duly considered the rival contentions and gone through the record carefully. A perusal of impugned order, it revealed that Assessing Officer has not looked into surrounding facts and circumstances before forming a belief that assessee has given undue benefit to its landlord. He proceeded the controversy only with a single angle that interest free deposits made by the assessee with the landlord is excessive. Had the Assessing Officer looked into the reasons for making such dep....