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TMI Blog2020 (11) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal: 1. The Ld. CIT(A) has erred in law and on facts in deleting disallowance of Rs. 1,07,07,684/- on account of product development expenses treating it as capital expenditure without properly appreciating the facts of the case and the material brought on record. 2. The Ld. CIT(A) has erred in law and on facts in deleting disallowance made by the AO with regard to foreign commission amounting to Rs. 59,15,144/- u/s. 40(a)(i) of the Act without properly appreciating the facts of the case and the material on record. 3. The Ld. CIT(A) has erred in law and on facts in deleting disallowance made by the AO with regard to interest u/s. 40A(2)(b) of the Act amounting to Rs. 15,88,604/- without properly appreciating the facts of the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's own case for assessment year 2009-10. 5. Now revenue has come before us by way of second statutory appeal. As we can see that in ITA No. 2491/Ahd/2014 for immediate preceding assessment year 2011-12 ITAT granted relief to the assessee and dismissed the appeal of the revenue with following observations: 4. We have heard rival contentions and perused the material on record. We observe that even prior to the current year as well as during the year the assessee has purchased and sold the product which were tested as per the analytical report. We also observe that assessee has been in the business of manufacturing of pesticides since last seven years and the practice of getting the product tested with analytical report was being follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is not so assessable, there is no question of tax at source being deducted. 13. In support of its contention, assessee also cited a judgment of Jurisdictional High Court in the case of MGM Exports in Tax Appeal No. 309 of 2018 wherein following question was framed by the Hon'ble Gujarat High Court and appeal of the Revenue was dismissed by the Hon'ble High Court. "2. Whether the Appellate Tribunal has erred on facts and in law in deleting the addition of Rs. 5,05,330/- made u/s. 40(a)(ia) of the Act without appreciating that the commission paid to a non-resident agent was subject to TDS u/s. 195 of the Act?" 14. The matter was in favour of the assessee with following observations: "It is indisputably true that such explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r interest paid on unsecured loan at the rate of 18%. Ld. A.O. after reducing 3% of interest allowed 15% interest. 18. In appeal before the Ld. CIT(A) who granted relief on the ground that A.O. has not given any basis and support to adopt the interest rate at 15% per annum as the prevalent interest rate. 19. Now Revenue has come before us by way of second statutory appeal. In the matter of Laxmi Pulse Rice in IT(ss) A No. 50/Ahd/2010 wherein similar issue was decided by the Co-ordinate Bench in favour of the assessee and allowed 18% of interest and similar rate of interest was allowed by the Co-ordinate Bench. 20. Thus in parity with the ITAT order, we dismissed the appeal of the Revenue. 21. Now we come to ground relating to deleting d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of second statutory appeal. 25. As we can read from the order of the ld. CIT(A) wherein audited balance sheet with regard to share capital and reserve and surplus were reproduced wherein assessee is having share capital of Rs. 2500 lacs and reserve and surplus is having of Rs. 2514 lacs and total comes to 5014 lacs. Meaning thereby, assessee is having interest free funds for much more. 26. And in support of its contention, assessee cited a judgment of Hon'ble Gujarat High Court in the matter of Raghuvir Synthetics 354 ITR 222 wherein relief was granted to the assessee with following observations: "During the course of the assessment proceedings for the assessment year the 2001-02, Assessing Officer noticed that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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