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2021 (9) TMI 851 - AT - Income TaxTDS u/s 195 - addition u/s 40(a)(ia) - export commission to non-residents - HELD THAT - This issue is covered in favour of the assessee by the order of the ITAT in the case of IDS Infotech Ltd. 2016 (6) TMI 98 - ITAT CHANDIGARH and the findings of the ld. CIT(A) are in accordance with the decision of Tribunal. Further, the ld. CIT(A) has followed the decision of the CIT(A) Gurgaon in the assessee's own case for the A.Y. 2012-13 and his predecessor, CIT(A) Chandigarh-2 in assessee's own case for A.Y. 2013-14. Since the Ld. CIT(A) has decided this issue in favour of the assessee by following the decision of the ITAT, we do not find any reason to interfere with the findings of the Ld. CIT(A) - we dismiss this ground of appeal of the Revenue and uphold the findings of the ld. CIT(A). Addition u/s.36(1) (va) on account of employees share paid after due date - non-payment of employees contribution to welfare funds on or before the due date as per the relevant Act - HELD THAT - The case of the assessee is directly covered by the decision of Hon'ble Punjab Haryana High Court in the case of Commissioner of Income Tax Vs Mark Auto Industries Ltd. 2013 (1) TMI 448 - PUNJAB AND HARYANA HIGH COURT . Since in the present case the assessee has deposited the ESI/PF before the due date of filing of the return, respectfully following the decision of Mark Auto Industries (supra) the addition made by the AO is deleted. Ground of appeal no. 2 is allowed. Addition u/s.14A r.w.r. 8D - HELD THAT - As during the course of appellate proceedings specifically pleaded that it had made investment in the shares, which was made out of the internal accruals and not out of borrowed funds, however, no dividend was received on the said investment - findings of the ld. CIT(A) are based on the judgement in the case of CIT Vs M/s. Lakhani Marketing 2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT wherein it has been held that unless and until there is receipt of exempt income during the year relevant to the assessment year under consideration, section 14A cannot be invoked. No merit in the contention of the Revenue that the ld. CIT(A) has wrongly deleted the addition - Decided in favour of assessee.
Issues Involved:
1. General ground of appeal. 2. Deletion of addition for non-deduction of TDS under Section 195. 3. Deletion of addition under Section 36(1)(va) for late deposit of employee’s contribution to welfare funds. 4. Deletion of addition under Section 14A for disallowance of expenses related to exempt income. Issue-wise Detailed Analysis: 1. General Ground of Appeal: The Revenue's first ground was general and did not require specific adjudication. 2. Deletion of Addition for Non-Deduction of TDS under Section 195: The Revenue challenged the CIT(A)'s deletion of an addition of ?2,06,81,641/- made by the AO for non-deduction of tax at source on payments made to non-residents. The Revenue argued that the commission paid to non-residents accrued in India, necessitating TDS under Section 195. The CIT(A) relied on the ITAT Chandigarh’s decision in IDS Infotech Ltd. and the Supreme Court’s ruling in GE India Technology Centre (P) Ltd. vs CIT, concluding that the income did not accrue in India and thus TDS was not required. The Tribunal upheld the CIT(A)’s decision, noting that the issue was covered by precedent and that the CIT(A) had correctly applied the law. 3. Deletion of Addition under Section 36(1)(va) for Late Deposit of Employee’s Contribution to Welfare Funds: The Revenue contested the CIT(A)'s deletion of an addition of ?38,307/- made under Section 36(1)(va) for late deposit of employees' contributions to welfare funds. The CIT(A) had relied on the Punjab & Haryana High Court's judgment in CIT Vs Mark Auto Industries Ltd., which held that contributions deposited before the due date of filing the return are allowable. The Tribunal affirmed the CIT(A)’s decision, agreeing that the issue was settled by the High Court ruling and that the contributions were deposited before the return filing deadline. 4. Deletion of Addition under Section 14A for Disallowance of Expenses Related to Exempt Income: The Revenue challenged the CIT(A)'s deletion of an addition of ?20,973/- made under Section 14A, arguing that expenses related to exempt income must be disallowed irrespective of whether such income was earned. The CIT(A) relied on the Punjab & Haryana High Court’s decision in CIT vs M/s. Lakhani Marketing, which held that Section 14A cannot be invoked unless exempt income is received during the relevant assessment year. The Tribunal upheld the CIT(A)’s decision, noting that the assessee did not receive any exempt income during the year and that the CIT(A)’s findings were consistent with the High Court’s ruling. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s deletions of the additions made by the AO. The Tribunal found no merit in the Revenue's contentions and upheld the CIT(A)'s application of relevant legal precedents. Order Pronouncement: The order was pronounced on 31 Aug, 2021.
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