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TMI Blog2017 (5) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... oking the provisions of section 40(a) (ia) of the Act in a case of short deduction of tax is not justified, because of the phraseology of section 40(a)(ia) of the Act itself. A perusal of section 40(a) (ia) clearly suggests that it gets triggered only in a situation when a tax is deductible at source but the same has not been deducted. A similar situation has been addressed by the Hon’ble Kolkata High Court in the case of S K Tekriwal (2012 (12) TMI 873 - CALCUTTA HIGH COURT ), wherein it has been held that no disallowance could be made by applying section 40(a)(ia) of the Act in a case where tax was deducted at source under a wrong provision resulting in short deduction of tax. Thus disallowance deleted - Decided in favour of assessee. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciate that the procurements of design, process and Drawing is in nature of import purchase of goods from a Non Resident Entity which is engaged in the business of manufacture of such products. The A.O. and CIT (Appeal) failed to appreciate that, even if the import purchase of goods is considered as import of Technical Services as per section 9(1)(vii), then also the income of Non Resident Entity cannot be deemed to accrue or arise in India in view of exception provided in clause (b) of Section 9(1)(vii) and that such so called services are rendered outside India, though eventually the Design, Process and Drawings received have been utilized in India 2) On the facts and circumstances of the case the Learned Assessing Officer an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a capital asset and yielding enduring benefit to the assessee 3. The assessee before us is a company incorporated under the provisions of Companies Act, 1956 and is, interalia, in the business of manufacture and supply of Burners and Flare System and Spares and Components, Erection and Installation and Commission of Flare system which are mostly procured by Oil and Gas Refineries. In the assessment year under consideration, it filed return of income declaring total income of ₹ 13,66,49,370/- which was subject to scrutiny assessment whereby the total income has been assessed at ₹ 14,44,73,970/- after making various additions/disallowances. The assessee company carried the matter in appeal before the CIT(A) who had all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Drawings etc was a revenue expenditure. Against such a decision, the revenue is in appeal before us. Further, in so far as, disallowance on account of non-deduction of TDS was concerned, the CIT(A) affirmed the stand of the AO. Against such aspect of the matter the assessee is in appeal before us. 7. At the time of hearing, the ld. Representative for the assessee, at the outset, submitted that he concedes the position that the expenditure in question was capital in nature and thus, the ground of appeal raised by the revenue deserves to be succeed. It was further submitted that in so far as the ground raised by the assessee is concerned, the same was not pressed. However, the ld.Representative drew our attention to para 4.10 of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such capital expenditure as per Rules. On this limited plea, the ld.DR had no objection since the AO had already noted in the above extracted para that the depreciation admissible under the Rules shall be allowed when the matter attains finality. 9. In the above background, we therefore, deem it fit and proper to dismiss the ground of appeal no.1 of the assessee and allow the appeal of the revenue. The AO is further directed to allow depreciation as per rules with respect to the impugned capital expenditure. 10. In the result, in so far as, Ground no.1 of the assessee is concerned, the same is dismissed and that of revenue is allowed. 11. In so far as ground No.2 of assessee s appeal is concerned, the same relates to disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the judgment of the Hon ble Kolkata High Court in the case of CIT V/s S K Tekriwal (2014) 361 ITR 432(Cal) to point out that section 40(a)(ia) of the Act could not be invoked in the present case, since the issue is of short deduction of tax at source and not a case of non-deduction of tax at source. 15. On the other hand, the ld.DR appeared for the revenue, and defended the stand of the lower authorities by pointing out that even lesser deduction of tax at source attracts the provisions of section 40(a)(ia) of the Act and that in such situation only the proportionate expenditure is liable to be disallowed. 16. We have carefully considered the rival submissions. In the instant case, the assessee has deducted tax at source, on paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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