TaxTMI 
TaxTMI 
2015 (6) TMI 981
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....ncome of C25,47,94,827/- and the assessment was completed under section 143(3) of the Act determining tax demand at C33,55,41,210/- by restricting deduction u/s.80IA(4) from C5,28,75,459/- to C4,63,48,720/- and disallowance of C7,42,19,641/- on foreign agency commission and warehousing and other charges incurred overseas u/s.40(a)(i). 3.1 The Assessing Officer on the other hand has observed that as per 80lA(5), the profits and gains of eligible business to which the provisions of subsection(1) apply shall, for the purposes of determining the quantum of deduction under the sub-section for the assessment year or any subsequent assessment year needs to be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year as in the instant case, the wind energy generation from the windmill units and the entire business profits/loss are sourced from this business which forms the basis for the computation of deduction. A unit-wise claim of deduction does not stand in line with the connotation of the term eligible business and hence the activity of wind energy generation through wind mill units was to be t....
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.... The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created.......'' The Commissioner of Income Tax (Appeals) allowed the claim of the assessee. Against this, the Revenue is in appeal before us. 5. We have heard both the parties and perused the material available on record. The issue is squarely covered by the judgment of jurisdictional high court in the case of Velayudhaswamy Spinning Mills (P) Ltd (cited supra). Being so, we are inclined to confirm the order of the Commissioner of Income Tax (Appeals) on this issue. This ground of the Revenue is dismissed. 6. The next ground is with regard to deleting the disallowance of C7,42,19,641/- made u/s.40(a)(i) r.w.s 195 of the Income Tax Act. 7. The fact of the issue are that that the assessee has incurred foreign agency commission of C4,47,37,475/- and warehousing and other charges incurred overseas of C3,00,82,166/-, during the year. It has been submitted by the ld. Authorised Representative for assessee that in the present case, the agents were operating outside the taxable territories and the commission received also were outside the taxable territories and it h....
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....sessing Officer has also relied on the decision of the Hon'ble Supreme Court in the case of Transmission Corporation of AP Ltd. v. CIT 105 Taxman 742, wherein it has been held that the assessee has an obligation to obtain NIL deduction certificate from the AO even when the assessee feels that the payment is not liable to TDS, which the assessee failed to do in this case. The Assessing Officer disallowed a sum of C7,42,19,641/- Aggrieved, the assessee preferred an appeal. 8. On appeal the Commissioner of Income Tax (Appeals) observed that the following facts of the case, which are undisputed that * The agents were non-residents * The non-resident agents were operating their business activities outside India * The commission paid relate to services provided outside India, namely, procuring export orders warehousing and follow up of payments * The non-resident agents did not have any permanent establishment or permanent business place in India * The commission was remitted to the non-residents directly outside India. 9. He relied on the judgment of Supreme Court in the case of GE India Technology Centre P. Ltd. v CIT (2010) 327 ITR 456 wherein it was held that tax deducted ....
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.... the provisions of Sec.195 of the Act income should be chargeable to tax in India, which is clearly not so in the instant case. In view of the above discussion and respectfully following the judgement of the Hon'ble Supreme Court in the case of GE India Technology Centre P. Ltd. v CIT 327 ITR 456, he directed the Assessing Officer to delete the addition made towards foreign agency commission, warehousing and other charges u/s 40(a)(i) of the Act. According, the Commissioner of Income Tax (Appeals) allowed this ground. Against this, the assessee is in appeal before us. 13. We have heard both the sides and perused the material on record. In our opinion, this issue is squarely covered by the earlier order of the Tribunal in the assessee's own case for the assessment year 2010-2011 in ITA No.2311/Mds/2013 vide order dated 28.03.2014. In the said order, the Tribunal observed as under:- ''5. We have heard both parties and gone through the case file. As already stated hereinabove, the CIT(A), whilst deleting the impugned addition u/s 40(a)(i) pertaining to overseas payments made by the assessee on account of commission, warehousing and other charges, has followed order of the 't....