2015 (2) TMI 1400 - AT - Income Tax

TDS u/s 195 - Disallowance u/s 40(a)(i) - payments made to non-residents - assessee has not deducted TDS on agency commission and consultancy charges - assessee before ITAT submitted that the issue may be remitted back to the file of the A.O. for verification - HELD THAT - We find that neither the A.O. nor the Ld. CIT(Appeals) discussed the factual aspects of the issue. Therefore we set aside the order passed by the Ld. CIT(Appeals) and remit the matter back to the file of the A.O. to decide the issue after considering all the facts with regard to agency commission and consultancy charges and after giving reasonable opportunity of being heard to the assessee. Disallowance u/s 14A - As again the authorities below have not discussed the facts relating to the actual expenditure incurred by the assessee. Therefore we set aside the order passed by the CIT(Appeals) and direct the A.O. to decide this issue also afresh after examining the facts of the case. Appeal filed by the Revenue is allowed for statistical purposes.

Summary

Issues involved:
1. Deduction under Section 10A of Income Tax Act.
2. Disallowance under Section 40(a)(i) of the Act.
3. Disallowance made under Section 14A of the Act.

Analysis:
1. The appeal pertains to the assessment year 2009-10 involving the deduction claimed under Section 10A of the Income Tax Act. The assessee, engaged in providing outsourced product development services, filed a return admitting a total income. The Assessing Officer (A.O.) observed non-deduction of TDS on certain payments to non-residents deemed to arise in India under Section 9(1)(vii) of the Act. Consequently, invoking Section 40(a)(i), an amount was deleted. The Commissioner of Income Tax (Appeals) deleted the addition without discussing the facts, prompting the Tribunal to remit the matter back to the A.O. for a fresh decision after considering all relevant facts and providing a reasonable opportunity to the assessee.

2. The second issue concerns the disallowance made under Section 14A of the Act. The authorities below failed to discuss the actual expenditure incurred by the assessee. Therefore, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and directed the A.O. to reexamine this issue after a thorough evaluation of the case facts.

Conclusion:
The Tribunal allowed the appeal filed by the Revenue for statistical purposes, remitting both issues back to the A.O. for fresh consideration. Consequently, the cross-objection filed by the assessee was also allowed for statistical purposes. The judgment was pronounced on February 25, 2015, in Chennai.