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TMI Blog2011 (7) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has taken up three substantive grounds in the appeal, which read as under:- 1. For that the learned CIT(A) erred in confirming the disallowance of ₹ 1,52,000/- made by the learned Assessing Officer (AO) on account of loss on sale of raw materials. For that the disallowance so confirmed being not tenable is liable to be deleted. 2. For that the ld. CIT(A) erred in confirming the disallowance of ₹ 1,00,329/- made by the ld. AO on account of club fees. For that the disallowance so confirmed being not tenable is liable to be deleted. 3. For that the ld. CIT(A) erred in confirming the disallowance of ₹ 2,70,903/-/- made by the ld. AO u/s 40(a)(ia) of the Income-tax Act, 1961. For that the disallowance so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported by purchase and sale bills. Therefore, the loss is deductible in computing the income. In reply, the ld. DR relied on the findings of the ld. CIT(Appeals). 2.2 We have considered the facts of the case and submissions made before us. It is seen that the assessee furnished purchase and sale details, duly supported by bills, before the AO. Cotton is the rawmaterial used by the assessee in manufacturing yarn. No discrepancy has been pointed out in respect of purchase or sale. The disallowance has been upheld on the ground that the assessee has not been able to prove that the cotton was unusable. Even in absence of that, the transaction is on trading account and unless the contention of bogus loss is raised by the revenue, the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced before us. In this order, it is mentioned that major expenditure has been incurred on annual membership fees and very small amount has been incurred as expenditure on club. Relying on the decision in the case of OTIS Elevator Co. (India) Ltd. Vs. CIT, 195 ITR 682, it has been held that the expenditure is revenue in nature. The facts for this year are identical. Therefore, following this decision, it is held that the assessee is entitled to deduct the expenditure in computing the total income. 4. Ground no. 3 is against disallowance of ₹ 2,70,903/- made u/s 40(a)(ia). In this connection, it is mentioned in the assessment order that the assessee has paid fees for quality testing amounting to ₹ 2,59,603/-. The payment ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent in India and, thus, the provision contained in section 195 is not applicable. The case of the assessee is that it appointed a professional to render services regarding quality testing of the material exported by it. Therefore, services were rendered by him outside India. The payment was also made outside India. In view of the aforesaid decision, no income accrued to the foreign agent in India. Thus, the assessee was not obliged to deduct tax at source. In reply, the ld. DR relied on the order of the ld. CIT(Appeals). 4.2 We have considered the facts of the case and submissions made before us. The impugned order deals with a situation where tax is deductible at source u/s 195, but it has been deducted and paid in a subsequent year. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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