TaxTMI 
TaxTMI 
2023 (7) TMI 1155
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....de by AO on account of export promotion expenses since the assessee was under legal obligation to follow the provisions of TDS prescribed under Income Tax Act, 1961 before the credit or remittance of export promotion expenses 3. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs13,91,753/- made by Assessing Officer on account of interest expenses since the assessee was under legal obligation to follow the provisions of TDS prescribed under Income Tax Act 1961 before the credit or remittance of export promotion expenses 4. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs. 72 lacs made by Assessing Officer on account of preservation charges as it was clear from comparative chart given by the assessee that quantity of production has gone down from 1.72 lacs kg. in the year relevant to A.Y. 2010-11 to 1.68 lacs kg. in A.Y.2011-12 and the assessee was failed to established that there was any additional requirement of space for preservation of goods during the year. Further, the marginal increase in sales/turnover in sales/turnover from Rs. 213.14 crore in A.Y. 2010-11 t....
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....or arranging of export sales and recovery of payments could not be regarded as fees for technical services under section 9(1)(vii) of the Act. Reliance was also placed on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Grup ISM P. Ltd. [(2015) 378 ITR 205 (Del)] wherein the Hon'ble Delhi High Court held that where overseas enterprise acts as a liaison agent for an assessee and receives remuneration from each client successfully solicited for assessee such services cannot be said to be included within the meaning of consultancy services and would not come within the purview of the technical services under section 9 of the Act. 7. Heard rival submissions perused the orders of the authorities below. The ld. CIT (Appeals) deleted the disallowance of commission paid to foreign agents holding that the assessee was not liable to deduct TDS at source on commission paid to agents located outside India for procuring orders from buyers were all located outside India and not having permanent establishment in India. The provisions of section 195 of the Act were not applicable on the commission paid by the assessee as the same was not taxable in India as per the provisions o....
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....r Technical, Managerial or consultancy services so as to attract the provisions of section 9(1)(vii) of the Act read with section 195 of the Act. Following the decision of the Hon'ble Delhi High Court in the case of DIT (International Taxation) Vs. Panalfa Autoelektrik Ltd. (supra) the co-ordinate bench of Delhi Tribunal had taken a similar view in the case of ACIT Vs. Kapoor Industries Ltd. [187 ITD 603]. Therefore, on careful perusal of the order of the ld. CIT (Appeals) we do not find any good reason to interfere with the findings of the ld. CIT (Appeals). The order of the ld. CIT (Appeals) on this issue is sustained. Ground No. 1 of grounds of appeal is rejected. 9. Ground No. 2 of grounds of appeal of the Revenue is in respect of deleting the disallowance of Rs. 13,94,547/- out of Rs. 14,90,547/- on account of export promotion expenses. disallowance of export promotion expenses for non-deduction of TDS. The Assessing Officer while completing the assessment noticed that the assessee claimed export promotion expenses of Rs. 44,00,261/- as deduction. Out of Rs. 44,00,261/- an amount of Rs. 14,90,547/- pertained to participation charges in fair/ exhibitions. The assessee was requ....
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....respect of deletion of disallowance of interest expense. Briefly stated the facts are that in the course of assessment proceedings the assessee noticed that assessee has claimed interest expenses on secured and un-secured loans of Rs. 18.47 crores and Rs. 1.57 crores respectively as on 31.03.2011. The Assessing Officer noticed that the assessee has claimed bank charges and interest expenses of Rs. 1.88 crores in the P & L account. The Assessing Officer was of the view that assessee had diverted funds in the name of partners of the firm. Assessee was required to furnish details of expenses outstanding as on 1.04.2010 and investment made during the year and to show cause as to why proportionate interest on such investments made in properties by partners should not be disallowed. Assessee furnished its reply stating that the firm had given funds to three parties for purchase of properties amounting to Rs. 1.40 crores as on 31.03.2011 as under:- (i) Advant IT Park P. Ltd. Rs. 36,45,800/- (ii) Sun City Projects (P.) Ltd. Rs. 43,57,489/- (iii) Shree Mukund Associates Rs. 60,12,500/- 13.2 It was explained that the amount paid to Advant IT Park Pvt. Ltd. was for booking of space ....
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....t. The Assessing Officer noticed that the assessee paid preservation charges of Rs. 5,00,000/- per month during the whole year and later on, on 31.03.2011 two additional entries in respect of expenses of Rs. 60,00,000/- and Rs. 12,00,000/- were made on 31.03.2011 in respect of credit of these amounts to M/s. Miki Exports International. The assessee was required to furnish details and explain to justify the claim of these expenses. The assessee submitted that during the assessment year it had hired one chamber for storage/preserving meat at Rs. 5,00,000/- per month irrespective of any quantity at Meerut. It was explained that during the assessment year 2011-12 due to necessity it hired two chambers for storage/preserving meat at Rs. 5,00,000/- each chamber per month irrespective of any quantity at Meerut due to shortage of space at Meerut also and paid Rs. 12,00,000/-. However, the Assessing Officer on comparison of sales quantity and average rate between the assessment years 2010-11 and 2011-12 was of the view that there was no requirement of space of preservation of goods as compared to the preceding assessment year. Accordingly, he disallowed Rs. 72,00,000/- paid towards preserva....
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....preservation charges to the sister concern at the end of the Financial Year 2010-11 i.e. 31-03-2011. The assessee has also not filed any evidence to the effect that there was any additional requirement of space for preservation of goods during the year. Further no detail no agreement or any other document has been filed as to what the additional preservation facilities were availed by the assessee and as to when those facilities were taken. From the facts it becomes clear that additional credit of Rs. 72 lacs in P&L account made in the account of sister concern M/s Miki Export International is for non-business consideration which has been shown by the assessee to reduce the tax liability of the assessee firm. 8.5 In view of the above facts of the case genuineness of incurring the expenses for the purpose of business in this year has not been established. Therefore out of the preservation charges of Rs. 1.32 crores additional expenses of Rs. 72 lacs as discussed above are disallowed in respect of Miki Export International" The observations of the Assessing Officer are ill founded and not based on correct appreciation of facts. The fact is that the assessee is an exporter of meat....
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....sed 2,29,944 Meat processed 175,38,271 172,85,554 Goods returned 1,40,000 Sale 188,44,386 168,43,496 184,01,945 172,35,830 Closing Stock : 20,00,890 11,66,115 Thus it is clear that the closing stock in current year is almost double as compared to the immediately preceding year, therefore, it needed double space for storage and thus took additional chambers on rent. It is not a case where the rates given by the assessee for renting of chambers have increased in comparison to the immediately preceding year. The amount of preservation charges have increased because of increase in the storage space taken on rent during the year. The requirement of preservation facilities is the prerogative of the assessee and the assessing officer cannot step into the shoes of the assessee to judge the business expediency of incurring an expenditure i.e. hiring additional chambers. Had additional chambers not been hire, it would have resulted in loss of production resulting in more loss the additional cost of chambers. In view of the above submissions supported by the documentary evidence filed, the addition of Rs. 72,00,000/- deserves to be deleted." The appellant d....
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....orders the processed meat may have to be refrigerated for a longer period of time. The manufacturing activity cannot be closed in case the inventory is piled up. The plant has to run at the appropriate capacity at all times. The premises required for storage does not depend on the quantity sold but the level of stock maintained as per the availability of stocks and requirement of business. Also the space at the cold storage may not be readily available on a short notice and has to be booked in advance. The amount of preservation charges have increased because of increase in the storage space taken on rent during the year. The requirement of preservation facilities is the prerogative of the assessee and the assessing officer cannot step into the shoes of the assessee to judge the business expediency of incurring an expenditure i.e. hiring additional chambers. Had additional chambers not been hire it would have resulted in loss of production resulting in more loss the additional cost of chambers. In view of the above submissions supported by the submissions and documentary evidence filed on the last date of hearing the addition of Rs. 72,00,000/- deserves to be deleted." 4.4.3 ....