TaxTMI 
TaxTMI 
2021 (5) TMI 243
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.... by the A.O. as Rs. 1507014) paid on 4-5-2004 pursuant to the interim order dt. 15-4-2004 received by the assessee on 24-4-2004 as well as the balance provision of Rs. 15114 based on the final settlement order dt. 11-4-2005 paid on 26-4-2005 before the due date of filing the return in view of the mercantile system of accounting being followed on the ground that the liability was not crystalised during the year. It is submitted that the entire expenditure is admissible as an expenditure in the year under appeal itself and, hence, the addition of Rs. 4462362 be deleted. 2. That the C.I.T.(A) further erred in confirming the disallowance of depreciation of Rs. 12200 on the cost of the furniture of Rs. 122000 acquired on 22-5-2004 and provided at the residence of the employee of Sudarshan Services Ltd. who was looking after the work of the appellant and the professional fees and the rent was also being paid to the said company. It is submitted that the same was provided as per the terms agreed upon and, hence, the said depreciation be allowed. 3. That the C.I.T.(A) also erred in confirming the disallowance of Sundry Balances Written Off aggregating to Rs. 17,89,592 as per the detail....
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....ess expenditure of the assessee and further disallowed brokerage and commission payment of Rs. 8,28,565/- in absence of tax deduction at source (TDS) under section 195 of the Act. On appeal before the ld. CIT(A), the assessee was allowed minor relief on depreciation on furniture and on sundry balance written off and all other additions were upheld. Further aggrieved, the assessee has filed present appeal before this Tribunal. 3. We have heard the submissions of the learned authorised representative (ld. AR) for the assessee and the learned senior departmental representative (Sr. DR) for the revenue and with their assistant gone through the orders of the lower authorities. Ground No.1 relates to Disallowance of Excise Duty of Rs. 29,36,235/- and Interest of Rs. 15,11,014/- (wrongly mentioned by the AO of Rs. 15,07,014/-). The ld. AR of the assessee submitted that the contention of the AO and ld.CIT(A) that because the final settlement order was passed on 11-04-2005 falling in F.Y. 2005-06, the liability cannot be said to have arisen in the F.Y. 2004-05 relevant to the A.Y.2005-06 is absolutely justified because the interim order was passed by the Excise Authorities on 15-04-2004 di....
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....n the assessee was directed to pay the liability of Rs. 29,36,234/-within 30 days from the receipt of the order. Thus, it cannot be said that the liability was not created during the relevant financial year. Hence, we find merit in the submissions of the ld AR for the assessee that the liability was crystallized during the relevant financial year, moreover, the assessee made the payment of liability of excise duty of Rs. 29,36,234/- and the interest thereon before the due date of filing return of income. Therefore, we direct the assessing officer to delete the entire disallowance of excise duty and interest thereon. In the result this ground of appeal is allowed. 6. Ground No.2 relates to disallowance of Depreciation of Rs. 12,200/- on furniture on 22.05.2004 provided at the residence of employee of Sudarshan Services Ltd. The ld.AR for the assessee submitted that the assessee had purchased and provided furniture of Rs. 1,22,000/- to Mr. Aniruddh Budheka, an employee of Sudarshan Services Ltd., as he was looking after the work of the appellant and Sudarshan Services Ltd. was paid Professional Fees as well as the rent for the premises provided to the appellant. The ld.AR further s....
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..../s 28 of the Act. d) On reconciling the accounts of various parties, it was noticed that there were some differences in the opening balances of some parties. Such differences aggregating to Rs. 1,04,359/- were written off. This is allowable. e) Some of the trade deposits given during the course of the business for the purpose of the business of the assessee were not refunded by the other parties. Total amount was Rs. 13,555/-. Such losses are inherent in the business and, therefore, allowable under section 37 or 28. f) Similarly, the advances of Rs. 81,900/- given for supply of stores items were not refunded by the suppliers though items were not supplied. Such losses are inherent in the business and, therefore, allowable under section 37 or 28. g) The assessee had paid Rs. 2,16,367/- for purchase of Advance License for importing Flex Fibers. However, later on due to the market conditions and import policies, Flex Fibers were not imported and, therefore, such license could not be used. Therefore, on expiry of the license period, the same was written off. Such losses are inherent in the business and, therefore, allowable under section 37 or 28. h) The assessee had paid....
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....,03,983/- by taking view that corresponding income of these items were not offered for taxation in earlier years and certain claims were made on account of capital items. Before ld CIT(A), the assessee explained that the said loss was claimed on account of trading loss and not bed debts, therefore, it was not required to offered in corresponding income in earlier years. For the amount claimed against the purchase of machine from SLMManeklal Industries, the assessee explained that advance was given as per trade practice and therefore, non-realization was to be allowed as trade loss. It was also explained that advance given for purchase of store items cannot be considered as for acquiring capital asset. The ld. CIT(A) not accepted the explanation furnished by the assessee by taking view that the assessee has not provided any documentary evidences and confirmed the action of assessing officer. Before us the ld. AR for the assessee furnished detail explanation with regard to various claims, which we have recorded in para 9(a) to (i) (supra). So far as claim No.(i) of reversal of Export rebate credited twice in the books to the extent of Rs. 8,842/- is concerned, the assessee explained ....
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.... Financial and Reconstruction (BIFR) and it became impossible to recover the advance. In our view, this amount is also admissible as a business loss. In the result, this ground of appeal which consist of several claims as referred above are allowed. 13. Ground No.4 relates to Disallowance of Electricity expenses of Rs. 1,54,383/- in respect of residence of Employees & Director. The ld.AR for the assessee submitted that the appellant had given a residential bungalow and the staff quarters to the Managing Director and some employees as per the terms of the appointment and, therefore, the Electricity expenses borne by the appellant were wholly and exclusively for the purpose of the business of the appellant and, therefore, allowable in computing the total income. As a matter of fact, even house rent recovery of Rs. 1,22,979/- was made from them which has been ignored by the A.O. It is true that at present, due to lapse of time, it is not possible to furnish a copy of the terms of appointment or a Board Resolution but it should be considered that the annual accounts were duly audited and there was no adverse remark of the auditors on the same. The same are, therefore, allowable. 14. ....
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.... of the facts we direct the assessing officer to allow the entire electricity expenditure. In the result this ground of appeal is allowed. 17. As we have allowed the full relief to the assessee on primary submissions of the Ld. AR for the assessee hence, the consideration of his alternative submission has become academic. 18. Ground No.5 relates to disallowance of brokerage & commission payment of Rs. 8,28,565/- to non-resident without TDS under section 195 of Act. The ld.AR for the assessee submits that the appellant had paid brokerage and commission aggregating to Rs. 8,28,565/- (wrongly typed as Rs. 1828565/- in the Grounds of Appeal) to non-resident agents for services rendered outside India in respect of the exports by the appellant to Egypt, Russia, Republic of Yemen and Syria as per the details of export bills and Commission given on page no. 14 of the paper book. The same was disallowed u/s 40(a)(i) on the ground that no tax was deducted under section 195 of the Act. Since the services were rendered y the agents outside India, the Commission paid to them was not chargeable to tax in India and, therefore, the provisions of section 195 of the Act were not at all applicable....
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....ble to tax in India and, therefore, the provisions of section 195 of the Act were not at all applicable. There is no dispute that the assessee paid brokerage and commission to the agents who rendered services outside India. Further the assessing officer has not brought any material on record that the income of the recipient is taxable in India. The Hon'ble Delhi High Court in CIT Vs EON Technology (P) ltd held that when a non-resident agents operates outsides the country no part of his business arise in India, and since payment is remitted directly abroad, and merely because an entry in the books of accounts was made, it does not mean that the non- resident had received any payment in India. The Hon'ble Apex Court in GE India Technology (P) Ltd Vs CIT (supra) held that in case the amount paid by the appellant to the foreign software supplier was not royalty and the same did not give rise to 'any income' taxable in India and therefore, the appellant was not liable to deduct tax at source, it arise only when such remittance is chargeable under the Act under section 4, 5 or 9. Therefore applying the same ratio on the facts of the case of assessee, when the brokerage and commission....
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.... non-deduction of TDS on brokerage and commission. The Assessing Officer levied penalty of Rs. 28,06,760/-, being 100% of tax sought to be evaded vide order dated 13.03.2015. The ld CIT(A) upheld the penalty except on the disallowance of commissions payment of Rs. 8,25,565/- for the want of TDS, vide order dated 01.02.2017. Thus, further aggrieved, the assessee has filed present appeal before this Tribunal. 24. We have heard the submissions of the ld. AR for the assessee and the ld. DR for the Revenue. The ld. AR for the assessee submits that the assessee has neither concealed the income nor furnished inaccurate particulars thereof. The additions/ disallowances were made due to difference of opinion of assessee and assessing officer, which cannot be basis of the levy of penalty. And that mere disallowance of claim does not empower the assessing officer to levy penalty. In support of his submissions the ld. AR for the assessee relied on the decision of Hon'ble Apex Court in CIT Vs Reliance Petro Product (322 ITR 158 SC), CIT Vs U.P. State Bridge Corporation (2018) 97 taxmann.com 279 (SC), Omprakash Mehta Vs ITO (316 CTR 280 Bom). 25. On the other hand, the ld DR for the Revenue su....