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TMI Blog2020 (4) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... ts is chargeable to tax under the provisions of the Act. In the circumstances mentioned above, assessee was justified in having a bonafide belief that the payments did not warrant application of Section 195 of the Act. In such circumstances, we are of the opinion that it could not have been saddled with the consequences mentioned under Section 40(a)(i) of the Act. Disallowances were rightly deleted by the ld. CIT(Appeals). Disallowance u/s 43B - delay in payment - Employees contribution to the ESI after 5 days from the due date specified - HELD THAT:- M/S. INDUSTRIAL SECURITY INTELLIGENCE INDIA PVT. LTD [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003. Disallowance u/s 14A - As per assessee assessee had huge interest free funds in the form of capital, reserves, surplus etc and hence no interest disallowance could be made and for the purposes of quantifying the average ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2012-13, the AO found the assessee remitted the employees contribution to the ESI after 5 days from the due date specified in that ACT but fully remitted before the due date specified in the Income-tax Act for filing the return u/s 139(1) of the Act and hence disallowed the sum claimed by the assessee. Aggrieved, the assessee filed appeals before the CIT(A) and the ld CIT(A) partly allowed the appeals . Aggrieved against the orders of the Revenue as well as the assessee files these cross appeals . 3. The ld D R presented the cases on the lines of grounds appeals and pleaded to restore the respective orders of the A O. However, the Ld. AR submitted that the ld CIT(A) following the Jurisdictional High Court s decision in the assessee s own case/ other case and the Jurisdictional ITAT decisions in the assessee s own case allowed these appeals and hence pleaded to dismiss the Revenue s appeals, issue wise as under. 4. The Ld. AR submitted that while making the assessments for the assessment years 2012-13, 2013-14 2014-15, the AO disallowed additional depreciation claimed u/s. 32(1)(iia) on the assets added during the II half of the preceding respective previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, according to us, the same is completely untenable. 7.1.The judgment of the Division Bench of this Court in M.M.Forgings Limited Vs. Additional Commissioner of Income Tax, did not deal the issue, which is at hand. 7.2.The issue, in hand, is as to whether balance additional depreciation could be carried forward to the year, following the previous year, in which, additional depreciation was claimed. 7.3.The Division Bench in M.M.Forgings case the said case was not concerned with the issue, with which, we are faced, that is, the right to carry forward the balance additional depreciation. Therefore, the judgment is completely distinguishable. 8.The second submission of Mr.Ravi, that Circular no.8 of 2002 dated 27.08.2002 and Circular no.281 dated 29.11.1979, have not been taken note of, in our judgment rendered in Commissioner of Income Tax, Madurai Vs. M/s.Shri T.P.Textiles Private Limited, according to us, will not impact, either the reasoning or the conclusion reached by us, in the said matter. 8.1.It is pertinent to note that the Circular no.281 dated 29.11.1979, predates the insertion of the relevant provision, i.e., second clause to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case are that the AO has disallowed depreciation claimed by the assessee at 60% on printers, scanners and UPS treating the same as office equipment eligible for depreciation at 15%. The assessee submitted that the AO should have allowed a higher rate of depreciation at 60% on UPS, since it is now fairly settled that UPS is an energy saving device. Similarly, printers which form part of data processing equipment should have been allowed depreciation at 60% as per the rate specified under the Incometax Act and not at 60%. The assessee has submitted that it has grouped UPS, printers and scanners under the block of assets computers and claimed depreciation at 60%. According to the AO, these items are eligible for depreciation at 15% being office equipment. However, the DRP observed, by considering the case laws cited by the assessee that in respect of printers, scanners, UPS, etc. networking equipment, the judicial decisions are strongly weighed in favour of the taxpayer on the ground that these hardware items become operational only through computer functions and these computer hardware when used as component of the computer become part and parcel of the computer. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents u/s. 40(a)(i) for the reason that the TDS was not deducted in the respective assessment year. In this regard, the Ld. AR submitted that this Hon ble Tribunal D Bench has decided this issue in assessee s favour in ITA No. 416/Mds/2016 for assessment year 2010-11 dated 06.03.2017. Relying on it , the ld CIT(A) allowed the corresponding appeals of the assesssee. Therefore, the ld AR pleaded to dismiss the corresponding grounds of the Revenue. 9. We heard the rival submissions. The relevant portion of the order relied on by the assessee is extracted as under: 33. The next issue in Revenue s appeal in ITA No.416/Mds/15 is with regard to deletion of addition made by AO u/s.40(a)(i) being agency commission, professional consultancy charges, warehousing charges, emballage cost, tool development charges etc . 34. The facts of the case are that as the assessee company has not deducted/remitted any TDS while making the above payments to non-residents, the AO invoked the provisions of sec.40(a)(i) of the Act and disallowed the same in his draft assessment order. The assessee submitted before the Panel that the agency commission, warehousing charges, freight/logistic/ emballage cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency commission, consultancy, warehousing, emballage costs have PE in India. These persons are rendering the services outside the country and the services were also availed/utilized outside India only. Consequently, the payments are not liable for tax in India in the hands of the respective recipients. Therefore, the assessee is not under the obligation to deduct any TDS on these payments. Similar issues were considered by the Tribunal in assessees s own case as stated above, wherein it was held that the above payments rendered by the non-residents are not liable for TDS u/s.195 of the Act and consequently, outside the purview of sec.40(a)(i) of the Act. Against this, the Revenue is in appeal before us. 35. We have heard both the sides and perused the material on record. Similar issue came for consideration in assessee's own case in ITA No.266 656/Mds./2012 (supra) wherein held that:- 46. We have perused the orders and heard the rival submissions. Purposes for which assessee had made payments to non-residents have already been given by us in the table at para 42 above. Assessee had not deducted tax at source while effecting such payments. As per the A.O., these expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution and logistics costs to substantiate that the expenditure were wholly incurred outside India. Assessing Officer had also extracted the pertinent parts of the agreement assessee entered with M/s Volvo, which read as under:- Services means sea freight of the container from the port of departure, India to the port of Gothenburg, Sweden custom clearance, haulage of the container to VLCs warehouse at Arendal, Gothenburg, storage of the Products for an average period of five weeks and on time delivery according to VCTs call offs to VLCs factories in Gothenburg, Sweden and Ghent, Belgium. Consolidation of incoming delinses from VTC and material control. Scope During the terms of this Agreement VLC undertakes to carry out Services in accordance with the working instructions, specifications, quality requirements and procedures given to VLC by or on behalf of BRAKES INDIA and in such way that the work satisfies VTCs specifications and requirements as stated in the Customer Contracts or the Appendices hereto including the weekly inventory to be sent to BRAKES INDIA and the on time delivery of the Products to VTC in the quantities agreed upon. VLC and BRAKES INDIA will, until th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he due date specified in that Act but it fully remitted before the due date specified in the Income-tac Act for filing the return u/s 139(1) and hence disallowed the sum claimed by the assessee. Aggrieved, the assessee filed an appeal before the CIT(A) and the ld CIT(A) relying on the Jurisdictional High Court decision in the case of M/s Industrial Security and Intelligence India P Ltd in TCA 585 586 of 2015 M P No 1 of 2015. Aggrieved against that order, the Revenue filed this appeal and pleaded to restore the order of the AO on the lines of grounds of appeal . 11. We heard the rival submissions. Since, the ld CIT(A) following the above Jurisdictional High Court s decision allowed the appeal , we do not find any reason to interfere with the order of the ld CIT(A) and hence dismiss the corresponding grounds of the Revenue for the assessment years 2012-13. 12. Thus, the Revenue s appeals for the assessment years 2012-13, 2013-14 2014-15 are dismissed . ITA Nos. 1463, 1464 1465/Chny/2019 for the ays 2012-13, 2013-14 2014-15 13. Now, let us take the Assessee s above appeals. The Ld. AR submitted that while making the assessments for the assessment years 2012-13 ..... 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