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TMI Blog2017 (1) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... reciating that the Hon. ITAT had not given any finding as to the non-applicability of TDS provisions in respect of the commission paid by the assessee and consequently applicability of section 40 (a) (i) of the Act. The C1T(A)failed to uphold addition made u/s 40 (a) (i)of the Act. " 2. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition of commission of Rs. 87,76,168/- made under section40(a)(i) of the Act, failing to take note of retrospective amendment ( w.r.e.f. 1/10.1976) brought in by Finance Act 2010, by which Explanation was inserted in section 9, on account of which fee paid for technical services rendered by nonresident would be included in his total income & consequently, TDS was deductible on such remittance made by resident to non resident & resultant applicability of section 40 (a) (i) of the Act" 3. "The appellant prays that the order of CIT(A) on the above grounds be set aside to the file of AD or confirm the order of the AO. 3. As a perusal of the Grounds of appeal reveal, the only issue arises from the action of CIT(A) in disallowing the expenditure of Rs. 87,76,168/- representing commission paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission is also not a related party to the assessee. All these findings of facts have been recorded by Ld. CIT(A) and are not disputed by the Revenue as there is no material on record to suggest that these findings of Ld. CIT(A) are either incorrect or false. It is also the findings recorded by Ld. CIT(A) that similar payments were made by the assessee in earlier years to Shri Bharat Goel and have been accepted as allowable expenditure by the Revenue. This fact is clear from the assessment order for A.Y 2006-07 which is passed under the provisions of section 143(3) of the Act and copy is placed on the paper book. It is also a matter of fact that while making the disallowance the AO did not bring any material on record to suggest that the payment made by the assessee to Shri Bharat Goel was for any purpose other than business of the assessee. In view of all these facts, it is difficult to uphold the findings of the A.O that the payments were not made by the assessee for business expediency. In absence of any contrary material and in view of the fact that similar payments have been accepted by the Revenue in earlier years as business expenditure, we are of the opinion that Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the objections raised by the Assessing Officer in this year namely, on account of section 37(1) of the Act as also invoking of section 40(a)(i) of the Act. 5. We find that the assertions made by the Ld. Representative for the assessee are borne out of the record and the objections raised by the Assessing Officer in the instant assessment year stand on the same footing as those taken in assessment year 2008-09. Be that as it may, in our considered opinion, even otherwise there is no justification for invoking the amendment made by the Finance Act, 2010 with retrospective effect from 01/06/1976, which seeks to prescribe that in terms of section 9(1) of the Act the amount paid to a non-resident shall be taxable in India, even if, the services have been rendered outside India. On the strength of such amendment, it is sought to be canvassed on behalf of the Revenue that even if, services have been rendered by the non-resident agent outside India but the same are liable to be taxed in India as the payer is in India, in view of the aforesaid amendment. The Ld. Representative for the assessee had pointed out that such amendment would, in any case, govern fees for technical services a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is in appeal before us. 7. Before us, the Ld. Representative for the assessee pointed out that during the year under consideration, assessee has earned exempt income only to the tune of Rs. 2,840/- on account of dividends. He has assailed the disallowance on various grounds, as can be seen from the detailed Grounds of cross objection, on record. In so far as the disallowance out of interest expenditure is concerned, Ld. Representative for the assessee pointed out by referring to the Annual Financial Statements placed in the Paper Book that assessee had enough interest-free funds in the shape of Share capital and Free Reserves & Surplus so as to cover the investments. By referring to the Balance Sheet as on 31/03/2010 placed in the Paper Book, it is pointed out that investments are to the tune of Rs. 1.17 crores, whereas the Share capital plus Reserves & surplus amount to Rs. 185.81 crores. Moreover, it has also been pointed out that during the year no fresh investments have been made and that in the earlier two assessment years no disallowance has been made out of interest expenditure. Under these circumstances, it is canvassed that having regard to the judgment of the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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