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TMI Blog2018 (6) TMI 1545X X X X Extracts X X X X X X X X Extracts X X X X ..... e to substantiate the nature of services provided by the local agents, the shortage in realisation is allowable as normal business deduction. Since the impugned payment is not chargeable to tax in India in the hands of recipients, the provisions of sec. 40(a)(i) will not apply. - Decided in favour of assessee Disallowance made u/s 14A - Held that:- Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance made u/s 14A of the Act.- Decided in favour of assessee - ITA Nos. 4221/Mum/2016 (A. Y.2011-12), ITA Nos. 4222/Mum/2016 (A. Y. 2009-10) - - - Dated:- 18-6-2018 - Shri B.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the foreign agents have rendered any service to the assessee. 5. The Ld A.R submitted that the assessee has exported goods during the year relevant to AY 2009-10 to a concern named M/s Arad Textile Industries Ltd, Tel Aviv, Israel. As per the terms and conditions of export, the above said customer was entitled to deduct 2% of sales value towards commission expenses. The Ld A.R invited our attention to the copy of Letter of Credit obtained by the above said party and submitted that the Letter of credit also clearly shows that the assessee shall get only 98% of the sale proceeds and the remaining 2% shall be paid to local agents. He further submitted that the invoice raised by the assessee also would show that commission of 2% was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. We shall now take up the appeal filed for AY 2011-12. The first issue urged therein relates to the disallowance of commission expenses. During the year relevant to AY 2011-12, the assessee paid Commission to Israel parties and also certain other parties. The AO disallowed a sum of ₹ 23.34 lakhs for non-deduction of tax at source. The Ld CIT(A) confirmed the same by following the decision rendered by him in AY 2009-10. 9. In the preceding paragraphs, we have deleted the disallowance of commission expenses on the reasoning that the assessee has realised only net amount and further the impugned payments are not liable for deduction of tax at source, since the same is not taxable in India in the hands of recipients. Following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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