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TMI Blog2015 (6) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... OURT) in support. Thus, we accept the assessee’s relevant ground and delete the impugned disallowance by treating these building repair expenses as revenue expenditure liable to be treated as current repair u/s.30 of the Act. - Decided in favour of assessee. Disallowance of commission expenditure u/s.40(a)(i) paid to foreign agents in lieu of procuring export order - Held that:- The assessee places on record agreement dated 8th December, 2005 highlighting its payees obligations, Revenue therein fails to point out involvement of any technical component therein. The assessee’s overseas agents have procured export orders and provided logistic support through adequate publicity etc. There is not even an iota of evidence to prove any technica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The same were summarily processed. Thereafter, the Assessing Officer completed a regular assessment on 30.11.2010 inter alia holding assessee s claim on building repair of ₹ 17,11,804/- as capital expenses and disallowed commission paid to foreign export agents u/s.40(a)(i) amounting to ₹ 10,96,445/- for non deduction of TDS. 3. The CIT(A) has affirmed the Assessing Officer s action. This leaves the assessee aggrieved. 4. We come to assessee s first substantive ground relating to disallowance of building repair expenses. The Assessing Officer considered Section 30A Explanation to observe that only expenditure on current repairs not forming capital expenditure is allowable. He stated that the assessee s repair was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange in the factory building, non carrying out of any civil work, entire renovation meant to replace the old normal wear/tear of the building, non appointment of any civil engineer, no steel item being used and no new building or asset of different size and shape to have come up. The lower authorities are fair enough in not specifically rejecting these pleas. The assessee has only replastered, re-furnished and re-plumbered its factory building. This is not the Revenue s case that the same has caused any increase in capacity of the building or otherwise. The Assessing Officer has been heavily swayed by the quantity of the material used (supra). We observe that this factor is not relevant in deciding such an issue of capital and revenue expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides. Records perused. The Board had issued circular no.786 dated 7.2.2000 exempting similar commission payments from TDS deduction. The same was withdrawn vide circular 7/09 dated 22.10.2009. The relevant assessment year is 2008-09 having accounting period from 1.4.2008 to 31.3.2009. There is no dispute between parties about the former circular and its withdrawal by a subsequent one. It is not the Revenue s contention that this withdrawal is with retrospective effect covering the earlier span of time. The assessee also makes submissions on these very lines. Therefore, we hold that the Board s circular dated 22.10.2009 withdrawing the earlier one exempting foreign agencies commission from TDS deduction has to be treated as having prospe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvement of any technical component therein. The assessee s overseas agents have procured export orders and provided logistic support through adequate publicity etc. There is not even an iota of evidence to prove any technical service actually rendered to the assessee. Thus, the Revenue s contention relating to Section 9(1)(vii) aplicability stands negated. We hold that the assessee has not availed any technical services from its overseas agents so as to deduct TDS on the impugned export commission payments. The Hon ble Supreme Court in G.E. India Technology Centre P. Ltd., 329 ITR 110 (Delhi) [Sic. 327 ITR 456] has held that Section 195 applies only when overseas payments are taxable in the recipients hands under the Act. Therefore, we dele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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