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TMI Blog2016 (1) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... change gains for deduction u/s.10B and it is also apparent from the facts of the case that ld.AR could not substantiate his ground with any material evidence. Therefore, we are inclined to uphold the order of the ld. Commissioner of Income Tax (Appeals) on this ground also. - Decided against assessee Disallowance u/s.14A read with Rule 8D - Held that:- We find that facts and circumstances of the present case pertaining to holding and subsidiary company of two different countries, and which needs to be verified with the quantum of share holding and DTA agreement for dividend income. We are of the considered opinion that matter needs to be re-examined and set aside the issue in dispute to the file of the Assessing Officer. The Assessing Officer is directed to allow the claim after considering the satisfactory explanations and material evidence for dividend income. - Decided in favour of assessee for statistical purposes. Disallowance u/s.40(a) (ia) - Non deduction of TDS on contract payments - Held that:- the addition u/s.40a(ia) of the Act can be made if both the conditions are satisfied in respect of applicability of TDS under chapter XVII B and tax was not deducted by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No.399/2010-11 for the assessment year 2010-2011 passed u/ss.143(3) and 250 of Income Tax Act (in short the Act ). 2. The brief facts of the case are that the assessee is a limited company and in the business of manufacturing of UPS systems and filed return of income on 30.09.2008 disclosing total income of ₹ 21,98,17,563/- and return of income was processed u/s.143(1) of the Act on 22.02.2010. Notice u/sec 142(1) was issued and the assessee filed detailed information and submitted explanations duly supporting the return of income. The Assessing Officer completed the assessment u/s.143(3) of the Act by making additions and assessed income at ₹ 22,52,35,607/-. 3. The first ground raised by the assessee in appeal on denial of exemption claimed u/s.10B of the Act in respect of export proceeds received after stipulated period and also foreign exchange gains from the calculation of exemption u/s.10B of the Act. 3.1 The assessee company is manufacturer of electronic components and filed audit report under section 44AB and also claimed exemption u/s.10B in respect of EHTP Division (Electronic Hardware Technology Park Division) engaged in manufacture of UPS and pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exports, the sale proceeds of which have been received by the appellant in convertible foreign exchange within the stipulated time. The grounds of appeal, therefore, are dismissed. Aggrieved by the order of CIT(A), assessee preferred an appeal before the Tribunal. The ld. Authorised Representative submitted to treat the remittances of subsidiary company received after due date by applying the RBI circular. We after hearing the submissions of both the parties and law applicable for 100% EOU found as per Explanation 3 of Section 10B reads as under:- This section applies to the undertaking, if the sale proceeds of articles or things or computer software exported out of India are received in, or brought into, India by the assessee inconvertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf. At the outset, RBI is the competent authority to give special permission in writing to the assessee to receive sale proceeds after the said date. In the present case ₹ 48,23,426/- was received in October, 2008 and February 2009, after a period of six months from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest does not attribute to the dividend income and relied on alternative ground in respect of in respect of nonapplicability of Rule 8D prior to 24.03.2008 and if any disallowance has to be considered, it shall be proportionately and referred to page 39 of the Annual report of the assessee company and explained that dividend income is from 100% subsidiary company Numeric Lanka Technologies (Private) Limited, Sri Lanka. On the other hand ld. Departmental Representative relied on the findings of the lower authorities and objected to the submissions of information before the Tribunal regarding dividend income of Srilanka subsidiary company and prayed for dismissal of the ground of the assessee. 4.3 We heard both the parties and perused the material on record. We find that facts and circumstances of the present case pertaining to holding and subsidiary company of two different countries, and which needs to be verified with the quantum of share holding and DTA agreement for dividend income. We are of the considered opinion that matter needs to be re-examined and set aside the issue in dispute to the file of the Assessing Officer. The Assessing Officer is directed to allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of ACIT vs. Pankaj Bhargava in ITA No.59/Del/2011, Dated 24th May, 2013 and pleaded for deletion of addition. On verifying the legal position, we find that the addition u/s.40a(ia) of the Act can be made if both the conditions are satisfied in respect of applicability of TDS under chapter XVII B and tax was not deducted by the assessee. In the present case, the assessee had deducted TDS at a lower rate, on perusing the case laws and decisions relied by the ld. counsel. We found that expenses are not liable to be disallowed u/s.40(a)(ia) of the Act on account of short deduction of tax at source. The assessee has further complied with both the limbs of applicability of provisions by deducting TDS on payments and depositing the same with the Government, which is not disputed by the Assessing Officer. We are of the opinion, that if any difference in strategy of taxability or nature of payment arises, in such circumstances alternatively, the Assessing Officer can treat the assessee as defaulter u/s.201 of the Act but not by invoking provisions u/s.40(a)(ia) of the Act. It is also apparent from facts of the case the assessee has deducted TDS and remitted to the treasury and we direct t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lower authorities. 6.3 We have heard both the parties and perused the material on record. The expenditure incurred by the assessee is only to upkeep the business enterprises to maintain wear and tear but not to increase the productivity or manufacturing activity. The change of flooring and other connected works will only improve the brand image which is indeed required for such global company. The legal position of such expenditure when it is dismantled cannot be rebuild or used for any other purpose as held by jurisdictional Madras High Court in the case of CIT vs. Amrutanjan Finance Ltd. 363 ITR 135 and Thiru Arooran Sugars Ltd vs. DCIT 350 ITR 324, were distinction has been made between capital and revenue expenditure and allowed as current repairs in the previous year. Applying the principles of law of Jurisdictional High Court. We are of the opinion that such expenditure has to treated as revenue expenditure and we direct the Assessing Officer to allow the deduction accordingly. The ground of the assessee is allowed. 7. In the result, the appeal filed by the assessee in ITA No.1344/Mds/2012 is partly allowed for statistical purpose. Order pronounced on the 20.11.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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