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TMI Blog2013 (7) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... p; [2] "Whether the Appellate Tribunal is right in law and on facts in deleting disallowance u/s. 14A of the I.T Act in respect of interest expenses incurred for investments in subsidiaries and administrative expenses such as staff salary of corporate office, audit fees, building rent and communication expenses ? [3] "Whether the Appellate Tribunal is right in law and on facts in deleting disallowance of deduction u/s. 80IB of the I.T Act in respect of interest income on late recovery of sale proceed from the debtors ? [4] "Whether the Appellate Tribunal is right in law and on facts in deleting disallowance of deduction u/s. 80IB of the I.T Act in respect of duty drawback incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also opined that there was considerable increase in the sales of the company and that therefore, payment of commission was justified. 2.3 With respect to six individual parties where the CIT [A] had some material to question the payment of commission, to such an extent, disallowances was confirmed. 2.4 It was this order of CIT [A], which the Tribunal in the impugned judgment, confirmed. The Tribunal observed as under :- 2.6 From the above para of the order of learned CIT [A], we find that a clear finding is given by learned CIT (A) that the assessee has given evidence that the recipient provided information in respect of services which helped the sales to mature and realize and therefore, payment of commission is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gents whereas for the balance amount for which disallowance of commission is deleted by learned CIT [A], he has given a clear finding that these parties were introduced by the commission agents and evidence were filed regarding rendering of the services by them and these findings of learned CIT (A) could not be controverted by the learned D.R regarding the judgment of Honble Apex Court on which reliance has been placed by the learned D.R, we find that this judgment is not applicable in the present case because the facts are different. In that case, this finding was recorded by the Tribunal that selling agency firm and the assessee has no genuine existence and such selling agency was found to be make believe document. The facts in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations :- 3.5 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. Regarding the grounds raised by the revenue in respect of disallowance of interest expenditure made by the A.O under Section 14A and deletion made by learned CIT (A), we find that no interference is called for in the order of learned CIT (A). We hold so because we find that with regard to the investment of Rs. 5907.18 lacs in foreign subsidiaries, no disallowance can be made u/s. 14A because dividend income from foreign subsidiaries is taxable in India. Regarding balance investment of Rs. 38 crores approximately in Indian subsidiaries, we find that interest free own fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds from the debtors. The Tribunal confirmed the view of the CIT [A]. The assessee carried the matter in appeal. CIT [A] ruled in his favour. Upon which, Revenue carried the issue in appeal before the Tribunal. Tribunal dismissed the Revenues appeal relying on the decision of this Court in case of Nirma Industries Limited v. Deputy Commissioner of Income-Tax, reported in [(2006) 283 ITR 402 (Guj)]. The Tribunal held and observed as under :- 5.1 Ld. D.R supported the assessment order whereas it was submitted by the learned A.R that this issue is now covered in favour of the assessee by the judgment of Honble Gujarat High Court rendered in the case of Nirma Industries, as reported in 283 ITR 402 (Guj) and it was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illustration (b) above, if the payment is described as sale price it would be profits derived from the industrial undertaking. This can never be, because in sum and substance these are only two modes of realising sale consideration, the object being to realise sale proceeds at the earliest and without delay. Purchaser pays higher sale price if it delays payment of sale proceeds. In other words, this is a converse situation to offering of cash discount. Thus, in principle, in reality, the transaction remains the same and there is no distinction as to the source. It is incorrect to state that the source for interest is the outstanding sale proceeds. It is not the assessee's business to lend funds and earn interest. The distinction drawn by r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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