TaxTMI 
TaxTMI 
2021 (7) TMI 443
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....ecords noticed that the assessment concluded by the AO for A.Y. 2015-16 on 10.11.2017 u/s 143(3) of the Act is erroneous and prejudicial to the interest of revenue for the following reasons:- 1. From clause No. 23 of Form 3CD under the heading 'Particulars of payment made to persons specified in Section 40A(2)(b), the assessee has made commission payment of Rs. 48,31,7131- to its associate enterprises M/s Aero Finance Management, France. However, the assessee has not deducted tax u/s 195 on the commission payments. 2. A sum of Rs. 4,04,847/- has been debited to the profit and loss account being interest on delayed payment of taxes. However, the assessee has not disallowed the same while computing total income.....
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....reasonably attributable to the business operations carried out by the nonresident vendor in India. In this case, the vendor has not carried out any operations in India. The non-resident vendor has helped the assessee company in sourcing customers in Philippines and USA. No services were rendered by the vendor in India. As there is no income that can be deemed to accrue or arise in India both as per the provisions of the Income tax Act and as per the provisions of DTAA, no TDS was made against this marketing expenditure incurred by the company. Hence there is no non-compliance with the provisions of Sec 195 warranting any disallowance of expenditure ills 40a(i) of the Income tax Act, 1961. 6. Regarding interest on delayed payment of taxes....
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....rm 3CD, an amount of Rs. 1,98,433/- was paid in AY 2015- 16 and Rs. 67,205/- was paid in AY 2016-17 at the time of filing e-TDS returns for Q4 of AY 2015-16. An amount of Rs. 1,72,634/- being interest on delayed remittance of TDS debited to statement of profit and loss in AY 2016-17 has been already disallowed by the Assessing Officer during the course of the assessment proceedings of AY 2016-17. An amount already disallowed in assessment cannot be disallowed again through proceedings u/s.263. It was reiterated that the interest paid on delayed payment of taxes is only compensatory in nature and is therefore eligible for deduction u/s 37 as business expenditure. 9. However, the PCIT was of the view that during the assessment proceedings,....
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....on the assumption that income has a situs and the situs has to be determined according to the general principles of law. The words 'accrue' or 'arise' occurring in section 5 have more or less a synonymous sense and income is said to accrue or arise when the right to receive it comes into existence. No doubt the agents rendered services abroad and have solicited orders, but the right to receive the commission arises in India when the order is executed by the applicant in India. The fact that the agents have rendered services abroad in the form of soliciting the orders and the commission is to be remitted to them abroad are wholly irrelevant for the purpose of determining the sites of their income. We follow ....
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....CIT vs Chennai Properties ( 239 ITR 435) it was held that the amount required to be deducted is the amount payable as income-tax. The interest paid for the period of delay takes colour from the nature of the principal amount required to be paid. The principal amount here would be the income-tax and the interest payable for delayed payment is the consequence of failure to pay the tax and in the circumstances, in the nature of a penalty though not described as such in Sub-section (IA) of Section 201 of the Act. The fact that the income-tax required to be remitted was not income-tax payable by the assessee, but is ultimately for the benefit of and to the credit of the recipient of the income on whose behalf that tax is payable does not in any ....
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....tax and interest on entry tax pertaining to capital assets needs to be capitalised irrespective of the year in which it was incurred and directed the AO to verify this aspect and disallow accordingly. 16. Based on the above facts, the PCIT was of the view that no enquiry was conducted by the AO which renders the order erroneous and prejudicial to the interest of revenue and concluded that there was nonapplication of mind by the AO and the twin conditions as contemplated in sec. 263 were satisfied in the present case. Consequently, the assessment was set aside to the file of the AO with a direction to the AO to examine the aforesaid issues and redo the assessment afresh as per law after affording reasonable opportunity of being heard to t....