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2013 (8) TMI 445 - ITAT MUMBAINon Deduction of TDS - Nature of payment - Head Office expenditure or Royalty – Held that:- Action of the revenue authorities on treating the amount being in the nature of royalty and hence not allowable under section 40(a)(i) cannot be allowed - By no standard this amount can be considered as royalty as a consideration for the use of the assets specified under Explanation 2 to section 9(1)(vi). This amount is in the nature of head office expenses - It would be in the interest of justice if the impugned order on this issue is set aside and the matter is restored to the file of the AO – direction is given to the AO to consider the deductibility or otherwise of such amount by treating it as head office expenses. Invocation of Section 14A read with exemption under section 10(15) and (33) – Held that:- After noticing that the funds for investment in securities fetching exempt income were out of own funds, it has been held that no disallowance under section 14A on account of interest is called for. As regards the amount of other expenses disallowable, tribunal has upheld disallowance @ 2% of exempt income. Rate of Tax - Article 26 of the DTAA with France - claim of the assessee that tax to imposed as per rate of tax applicable to Indian Banks - Permanent establishment (PE) - Held that:- CIT(A) has sustained the order of the AO by applying rate of tax @ 48%, instead of 35% as asked for by the assessee. Now that the assessee has accepted that the coordinate Bench of Kolkata has dealt with the issue and for the reasons mentioned therein, the AR accepts the rate as applied by the AO. - Decided against the assessee. Allowance of broken period interest as expenditure – Held that:- Similar issue was there in the appeal for the immediately preceding year and the Tribunal, following its decision for assessment year 1991-92, has decided this issue against the Revenue. In view of the fact that the facts and circumstances for the previous year relevant to the assessment year under consideration are similar and no distinguishing feature has been brought to our notice by the learned Departmental Representative, respectfully following the precedent, impugned order on this issue is upheld, by directing that the interest paid in respect of the broken period be set off against the interest received in respect of the broken period. Income tax chargeability on writing off provision of of bad debts - section 41(1) – Held that:- When the provisions for doubtful debts were added back in the computation of income in the respective years, there is no question of taxing them again in the year when they are written back.
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