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TMI Blog2023 (8) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2 of the assessment order dated 25.02.2013. Thus, having regard to the record, and the affidavit of the PCIT dated 31.10.2018, we are of the opinion, as noted above, that the weight of the evidence which was placed before the CIT(A) and the Tribunal is clearly in favour of the respondent/assessee. We find no reason to interfere with the impugned order. TDS u/s 195 - commission paid to a non-resident foreign agent - whether accrued or deemed to have accrued in India? - HELD THAT:- As no material was brought on record by the appellant/revenue, which could have established that the commission paid to a non-resident foreign agent had accrued or deemed to have accrued in India.Therefore, since no income chargeable to tax arose in the hands of the non-resident, as per the provisions of the Act, there was no obligation to deduct tax at source u/s 195 of the Act. Given this position, in our view, the Tribunal rightly sustained the deletion of disallowance u/s 40(a)(i). Disallowance u/s 37 - Assessee has not discharged its initial onus - HELD THAT:- Tribunal sustained the deletion of disallowance as it was made by the AO solely based on the information available in the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn? 2.3 Whether the Ld. ITAT erred in law in holding that the claim of the Assessee under Section 35 of the Act was allowable in law, as no argument was raised by the Revenue qua non-fulfillment of the conditions contained under sub-section (2) thereof [sic] when as a matter of fact no deduction was claimed by the Assessee under Section 35 of the Act in the return of income? 4. The Assessing Officer (AO), via assessment order dated 25.02.2013, has disallowed the claim made by the petitioner under Section 35 of the Income Tax Act, 1961 [in short, Act ], as according to him, this was not part of the Return of Income [in short, ROI ] filed by the petitioner. 5. The deduction claimed by the petitioner on this account, under Section 35 of the Act, was Rs. 3,46,32,280/-. 6. The record shows that the Commissioner of Income Tax (Appeals), [in short, CIT(A) ] via order dated 14.08.2013, reversed the view of the AO and allowed the deduction under Section 35 of the Act. 7. This view has been sustained by the Tribunal. 8. Mr Agarwal has drawn our attention to the order dated 09.10.2018 issued by the Coordinate Bench of this Court, wherein the following had been recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018. 13. Therefore, the moot question which arises for our consideration is whether Annexure-II/Annexure-A, which is appended to the PCIT s affidavit, was the ROI said to have been filed by the respondent/assessee. 14. We may note that the respondent/assessee has also filed a affidavit-in -reply dated 14.0.2019. 15. This affidavit has been filed by one Mr Sanjeev Saxena. The affidavit is accompanied by a document, which the affiant claims is the copy of the ROI (i.e., ITR-6) downloaded from the designated website. 16. The stand of the respondent/assessee is, thus, that the document which is appended to the affidavit-in-reply dated 14.01.2019 is the copy of the original ROI. 17. The appellant/revenue, however, contends to the contrary. 18. A careful perusal of Annexure-II which is appended to the appeal, and Annexure-A which is appended on the affidavit of the PCIT dated 21.10.2018, shows that the documents are titled Computation of Income and Tax Thereon (ITR-6) . 19. Clearly, this is not the ROI filed by the petitioner. 20. As noticed both by the Tribunal and CIT(A), this a computation of income concerning the respondent/assessee which was carried out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee from business profession is considered at Rs. 7,65,02,320/- as intimated to the assessee vide this officer letter dated 1.01.203 refer to above . [Emphasis is ours] 22. Clearly, after making the observations in the second paragraph that the respondent/assessee had claimed a deduction under Section 35 of the Act, the AO went on deny the deduction because of what was perhaps noted by the CPC while forwarding an intimation under Section 143(1) of the Act. 23. This, however, was corrected by the CIT(A) via order dated 14.08.2013. 24. For the sake of convenience paragraph 4 of the said order is extracted hereafter: 4. In ground no. 1 the appellant raised the issue of higher income taken in the intimation u/s 143(1). The appellant submitted that it appears that a some of Rs. 346,32,282/- being deduction u/s 35 of the Act is not allowed and hence the taxable income assessed u/s 143(1) is higher in the actual return income: The appellant submitted further that without any speaking order, the deduction claimed u/s 35 cannot be disallowed. The appellant also filed application u/s 154 to CPC on 11.03.2013 claiming the deduction u/s 35 with transaction ID n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 34632282/- to the assessee on account of capital expenditure on research and development. In the result ground No. 1 of the appeal is dismissed. [Emphasis is ours] 26. Thus, having regard to the record, and the affidavit of the PCIT dated 31.10.2018, we are of the opinion, as noted above, that the weight of the evidence which was placed before the CIT(A) and the Tribunal is clearly in favour of the respondent/assessee. We find no reason to interfere with the impugned order. 27. The appeal is accordingly closed, with regard to the aforementioned issues. 28. Although Mr Aggarwal s submissions started with this aspect of the matter, at this stage, he seeks to press other proposed questions of law as well, which are contained in paragraphs 2.4 to 2.7 of the appeal. 28.1 For the sake of convenience, the other proposed questions of law, raised in the appeal, are extracted below: 2.4 Whether the Ld. ITAT erred in law by upholding the deletion of disallowance of ₹1,35,03,868/- under Section 40(a)(i) of the Act by ignoring Explanation 2 to Section 9(1)(vii) read with Explanation to Section 9(2) and Section 5(2) of the Act? 2.5 Whether the Ld. ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission expenditure for non-deduction of tax at source to foreign agent after withdrawal of the above circular. We are also of the view that withdrawal of the circular cannot bring any change in the provision of section 5, 9 and 195 of the income tax act which determined the chargeability of any income in the hands of a non-resident. No material has been brought on record by revenue to show that income of the nonresident has accrued, or deemed to have accrued in India and therefore that income is chargeable to tax in the hands of Nonresident as per the Income tax Act.- In absence of this finding provision of section 195 of the act are not triggered. Therefore, in view of the above decision of the coordinate benches, we do not find any infirmity in the order of the Id CIT(A) in deleting the disallowance made by Id AO u/s 40a (i) on foreign commission payments. Further regarding the agreement, merely because date has not been put by one of the parties on it while putting signature cannot debar the assessee from claiming deduction of expenditure when parties have acted on that agreement and services rendered have not been disputed. We confirm the decision of Id CIT (A) on that co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraphs 2.6 and 2.7 of the appeal are concerned, the Tribunal, in our opinion for good reason, has concluded that electric fittings were amenable to higher rate of depreciation, as they were part of plant and machinery, and not furniture and fixtures. This view was backed by a decision of the coordinate bench of this court in ITA 1266/2010 , titled BSES Rajdhani Powers Ltd. 13. Ground No. 5 and 6 of the appeal are against the disallowance of depreciation of Rs. 262756/- on account of electrical fittings and of Rs. 154711/- claim on account of computer peripherals. X X X 15. We have carefully considered the rival contentions. The Id CIT{A) has dealt with above issue as under:- 7. Ground No, 4 This ground is against the action of A.O in restricting depreciation on Electrical Fitting at 10% as against claimed by the appellant at 15% on the ground that such electrical fittings are part of furniture and fixtures and appropriate rate of depreciation on furniture and fixture is 10%. Also, for this reason, AO has denied the benefit of Additional Depreciation. The AO restricted the rate of depreciation as per Section 32 of the Act vide new appendix 1 u/s 5 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery. This was so explained in letter placed at PB 6, to Ld. AO submitting that the impugned installations are in the nature of control penal, diesel tank, DG set and cost of its fitting, light fitting, water and compressed air pipes, M. V. Switch board, L. T. cables and terminations, compressor, etc. used for Plant and Machinery. This explanation of the appellant has not been denied or rebutted by Ld. AO as can be seen from the plain reading of the assessment order. Thus, when the facts say that these are plant and machinery, the appropriate rate of depreciation is 15% and not 10%. In view of the judicial pronouncements relied by the appellant the addition of Rs. 2,62,7567/- for electrical fittings and Rs. 1,54,711/- for projectors, batteries, printers and UPS is deleted. 16. Ld CIT(A) has correctly deleted the disallowance on account of depreciation on electrical fittings holding them part of the plant and machinery and not furniture and fixture as claimed by the Id AO. Further, depreciation on the computer peripherals was also allowed @60 %relying upon the decision of Hon ble Delhi High court in case of BSEC Rajdhani Power Ltd. ITA No. 1266/2010. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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