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2019 (7) TMI 1096 - HC - Income TaxAddition u/s 195 - disallowance u/s 40(a)(ia) of commission paid to foreign client - HELD THAT - The question as proposed by the Revenue is no longer res integra in view of the decision of this Court in the case of PR CIT vs. MGM Exports 2018 (5) TMI 1240 - GUJARAT HIGH COURT . The ratio of the decision of this Court referred to above is that a person paying interest or any other sum to a nonresident is not liable to deduct tax if such sum is not chargeable to tax under the Act. Thus, the first question proposed by the Revenue is squarely covered. Addition in respect of estimation of Gross profit - HELD THAT - Findings recorded by the Tribunal are that AO declines to meet the specific points raised by the assessee in first appellate proceedings, there is obviously no point in challenging the conclusions arrived at in the first appellate proceedings based on vague generalities. No specific issues are raised in appeal before us. Further also noted that the learned CIT(A) has granted impugned relief on the basis of specific explanations of the assessee which have remained uncontroverted. In the light of these discussions as also bearing in mind entirely of the case, ITAT approve well reasoned arrived at by the learned CIT(A) and decline to interfere in the matter. - We are not inclined to admit this appeal even so far as the second question as proposed by the Revenue is concerned.
Issues:
1. Disallowance under Section 40(a)(ia) of the Income Tax Act for non-deduction of tax on commission paid to foreign client. 2. Addition made in respect of estimation of Gross profit. Analysis: Issue 1: Disallowance under Section 40(a)(ia) of the Income Tax Act for non-deduction of tax on commission paid to foreign client: The appeal by the Revenue questions the decision of the Income Tax Appellate Tribunal regarding the disallowance under Section 40(a)(ia) of the Act. The Tribunal upheld the deletion of the addition made on account of disallowance of commission paid to a foreign client without complying with Section 195 of the Act. The Revenue argued that the Tribunal erred in law and on facts. However, the Court referred to a previous decision in the case of PR CIT vs. MGM Exports, where it was established that tax deduction is not required if the sum paid to a nonresident is not chargeable to tax under the Act. As the issue was already settled by the previous judgment, the Court found that the first question proposed by the Revenue was squarely covered. Issue 2: Addition made in respect of estimation of Gross profit: Regarding the second question raised by the Revenue concerning the addition made in respect of the estimation of Gross profit, the Tribunal's findings were in favor of the assessee. The Tribunal noted that the Assessing Officer failed to provide substantial explanations beyond vague generalities and discrepancies. The CIT(A) granted relief based on specific uncontroverted explanations of the assessee. The Tribunal, after considering the facts and circumstances of the case, approved the decision of the CIT(A) and declined to interfere in the matter. Consequently, the Court was inclined to dismiss the appeal on this issue as well, based on the findings of fact presented by the Tribunal. In conclusion, the Court dismissed the Tax Appeal by the Revenue, upholding the decisions of the Tribunal on both issues raised in the appeal.
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