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2018 (9) TMI 60 - AT - Income TaxTDS u/s 195 - Revenue s case before us is that the assessee had failed to place on record any non-deduction of TDS certificate u/s. 195(1) - services rendered in India - Held that - We find no merit in the instant argument. The fact remains that there is no material on record indicating the assessee s payees to have rendered any service in India so as to be assessable in India. Hon ble Madras high court in case CIT vs. Faizan Shoes Pvt. Ltd. 2014 (8) TMI 170 - MADRAS HIGH COURT holds that section 9(1)(i) r. w. s section 9(1)(vii) of the Act does not apply in absence of any services rendered in India. Chapter XVII of the Act applies only in case the payments in issue are taxable in the hands of overseas recipients hands in India and not otherwise. The assessee has also succeeded on the very issue in preceding assessment year 2007-08 as well. - decided in favour of assessee Disallowing assessee s stores and spares consumption claims - Held that - The assessee has been consistently succeeding on the very issue since preceding assessment years regarding its claim of consumption of stores and spares comprising of various facilities offered to workmen in all of its tea estates. There is no rebuttal forthcoming to the clinching figures of comparison qua the impugned expenditure vis-a-vis the three preceding assessment years hereinabove. The Assessing Officer appears to have conducted remand proceedings wherein he could not find out even a single irregularity in assessee s books of account as well as all other details produced. We therefore uphold the CIT(A) s finding under the challenge in this instant common issue in these two assessment years - decided in favour of assessee Disallowance of nursery expenditure - revenue or capital expenditure - Revenue s only argument is that such nursery expenditure as the one in hand before us ought not to have been treated as a revenue item of claim in the lower appellate proceedings - Held that - Coming to enduring advantage spread over number of years hon ble apex court s decision in Taparia Tools Ltd. Vs. JCIT 2015 (3) TMI 853 - SUPREME COURT rejects Revenue s similar reasoning in concluding that such an approach does not form a justifiable ground to reject a claim of revenue expenditure. We further reiterate that hon ble jurisdictional high court s decision in CIT vs. Tasati Tea Ltd 2003 (2) TMI 42 - CALCUTTA HIGH COURT also holds similar expenditure to be revenue in nature. - decided in favour of assessee Sales promotion expenditure disallowance - Held that - Failure to dispute the fact that the impugned sum of ₹9, 48, 411/- forms a minuscule percentage of the total claim amounting to ₹15, 41, 48, 965/- i. e. less than 1% of the total figure. The relevant payees count is more than 100 involving corresponding sums of ₹4, 000/- to ₹9, 000/-. The assessee has categorized all of them as small parties. The fact also remains that the assessee has also not been able to file all the relevant details of regarding these alleged small parties. We therefore conclude in larger interest of justice that a lump sum disallowance of ₹1. 00 lakh out of the impugned figure of ₹9, 48, 411/-would be just and proper in the given facts and circumstances with a rider that the same shall not be treated as a precedent in preceding or succeeding assessment year.
Issues Involved:
1. Disallowance of lease rent payments. 2. Disallowance of commission payments to non-resident export agents. 3. Disallowance of stores and spares consumption claims. 4. Disallowance of nursery expenditure. 5. Disallowance of sales promotion expenditure. Detailed Analysis: 1. Disallowance of Lease Rent Payments: The Revenue challenged the correctness of the CIT(A)’s decision to reverse the disallowance of lease rent payments made by the assessee to M/s Koomber Properties & Leasing Co. Pvt. Ltd. The tribunal noted that this issue had been consistently decided in favor of the assessee in previous assessment years (1988-89 to 1992-93) and that the Revenue’s appeals against these decisions were still pending before the jurisdictional high court. The CIT(A) had adopted judicial consistency based on these precedents. The tribunal found no merit in the Revenue’s appeal due to a lack of distinction on facts or law and thus rejected the Revenue’s grievance. 2. Disallowance of Commission Payments to Non-Resident Export Agents: The Revenue sought to restore the disallowance of commission payments made to non-resident export agents by the Assessing Officer due to non-deduction of TDS under section 40(a)(i) of the Act. The CIT(A) had reversed this disallowance, noting that the services were rendered outside India and that the agents had no permanent establishment in India. The tribunal upheld the CIT(A)’s decision, referencing the Supreme Court’s ruling in GE India Technology Centre Pvt. Ltd. vs. CIT, which clarified that TDS obligations under section 195 arise only if the payments are chargeable to tax in India. The tribunal also noted that similar disallowances had been deleted in previous assessment years. 3. Disallowance of Stores and Spares Consumption Claims: The Revenue challenged the deletion of disallowances related to stores and spares consumption claims. The CIT(A) had detailed the nature of the expenses and noted that the proportion of expenses had remained consistent with previous years. The tribunal found that the Assessing Officer had not provided specific findings to support the disallowance and had not identified any irregularities in the assessee’s books of account. The tribunal upheld the CIT(A)’s decision, noting that the assessee had consistently succeeded on this issue in previous years. 4. Disallowance of Nursery Expenditure: The Revenue disputed the deletion of nursery expenditure disallowance, arguing that such expenditures provided an enduring advantage and should be treated as capital in nature. The CIT(A) had accepted the assessee’s argument that the nursery expenses were related to the maintenance and upkeep of immature plants used for replanting within the existing plantation area. The tribunal cited the jurisdictional high court’s decision in CIT vs. Tasati Tea Ltd., which supported the treatment of such expenses as revenue expenditure. The tribunal rejected the Revenue’s appeal, emphasizing that the enduring advantage argument was not sufficient to classify the expenditure as capital. 5. Disallowance of Sales Promotion Expenditure: The Revenue sought to revive the disallowance of sales promotion expenses due to a lack of supporting evidence for a portion of the claimed amount. The CIT(A) had noted that the disallowed amount represented a small percentage of the total sales promotion expenses and involved payments to numerous small parties. The tribunal concluded that a lump sum disallowance of ?1.00 lakh out of the disputed amount would be just and proper, given the circumstances, and directed that this should not be treated as a precedent for other years. Conclusion: The tribunal dismissed the Revenue’s appeals for ITA No. 2086/Kol/2016 and ITA No. 2087/Kol/2016, while partly allowing the appeal for ITA No. 2088/Kol/2016 with a minor disallowance adjustment. The order was pronounced in the open court on 17/08/2018.
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