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TMI Blog2015 (8) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... er to restrict disallowance under section 14A to 2% of exempt income in place of 10% adopted by the Assessing Officer. The Assessing Officer while completing the assessments noticed that assessee received dividend income which is exempt from tax under section 10(34) and 10(35) of the Act. The Assessing Officer noticed that assessee did not disallow any expenditure under section 14A of the Act in relation to the dividend income earned by the assessee. Explanation was called for by the Assessing Officer. The assessee submitted that it had not incurred any expenditure for earning exempt income. The assessee company submitted that since it had not incurred any expenditure by way of interest and other charges, no arbitrary amount of expenses can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Appeals) on this issue. The grounds raised by the Revenue on this issue are rejected. 6. The next issue in both the appeals of the Revenue is that Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to delete disallowance made under section 40(a)(i) in respect of the amounts paid by the assessee to M/s. Amalgamation Pvt. Ltd. The Assessing Officer while completing the assessment noticed that assessee made certain payments to M/s. Amalgamation Pvt. Ltd. and no TDS was deducted on such payments and therefore proposed to disallow the said payments under section 40(a)(i) of the Act. In the course of assessment proceedings, assessee submitted that amounts paid to M/s. Amalgamation Pvt. Ltd. were reimbursement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er authorities. The Commissioner of Income Tax (Appeals) has considered the issue as to whether TDS provisions have application to the amounts paid to M/s. Amalgamation Pvt. Ltd. or not in para 5.1 & 5.2 of his order observing as under:- "5.1 The Id.AR contested as under: "The Amalgamation Pvt. Ltd pays the representative who acts on behalf of the participating group company's representative office at London. The total expenditure on the expenditure including rent, office facilities etc. incurred for the purpose of export promotion of products offered by the participating companies in the group during that year. The assesee is one of the participating companies in that group. It is submitted that entire amount has been paid to Amalga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat company, the question of making TDS on such income does not arise. Further the amounts paid outside India in the instant case are not falling under either royalty, interest or fee for technical services, therefore they are not chargeable to tax in India. The decision of the Hon'ble Supreme Court in the case of G.E. India Technology Centre P Ltd, 327 ITR 456 (SC) (2010) comes to the rescue of the appellant. Furthermore, my Id. predecessor has allowed such claim in his order vide ITA No. 523/06-07/A. II I dated 14.7.2010 in the case of another group concern I.P. Rings Ltd for A.Y. 99-2000 for similar payments made to Amalgamations P Ltd. In view of the above discussion, the disallowance u/s 40(a)(i) is not called for. The AO is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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