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TMI Blog2024 (2) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... ver and above the disallowance offered by the assessee. Disallowance of ESOP expenditure - HELD THAT:- As decided in Assessment Year 2017-18 [ 2024 (1) TMI 157 - ITAT DELHI] addition made towards ESOP expenses are allowed as held expenses are incurred with a view to retain the talent / staff for the benefit of the company and consequently such expenses are allowable as business expenditure. TP Adjustment on account of commission on standby letter of credit - HELD THAT:- As identical issue in assessee s own case in Assessment Year 2017-18 [ 2024 (1) TMI 157 - ITAT DELHI] wherein held as no cost has been borne by the assessee company and in the absence of any rebuttal to the assertion that actual bank commission charges incurred has been fully recovered from the AEs, we hardly see any justification in the Transfer Pricing Adjustment on this score. We thus are not inclined to address the alternative plea of excessive estimation. - Shri Challa Nagendra Prasad, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Appellant : Shri Amit Goel, Chartered Accountant, Shri Pranav Yadav, Advocate For the Respondent : Shri Rajesh Kumar, CIT-DR OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -deduction to tax at source on such remittances is in controversy. The assessee-company is engaged in the business of export of leather and textile products. The assessee company has entered into certain international transactions with agents in an overseas jurisdiction to carry out marketing and sales related activities therein. Commission payments have been made for procurement of export orders to various such overseas agents such as Ultima Italia SRL, Italy; World Fashion Trade Ltd, Hong Kong; Trade World Ltd, Hong Kong and several other parties having establishment abroad. The assessing officer has denied deduction of commission expenses for non deduction of TDS on such payments placing reliance on Hical Infra (supra). 9.1 In defense, it is the case of the assessee that commission payments are attributable to procurement of export orders for earning an income outside India and in lieu of services rendered outside India. The overseas agents are not authorized to conclude any contract on behalf of the Indian company and the pricing of the product is also determined by the Indian Company. The overseas agents carried out their assigned activity wholly outside India as a suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng from records. The DRP has also observed that agreements with overseas agent do not signify that any quality checks of the products are carried out by foreign commission agents. Thus, the commission payments cannot be regarded as fee for technical services. Despite such observations, no facts have been brought on record to the contrary in the final assessment order. Thus, in the absence of any services of technical nature, commission payments to selling agents outside India is outside the ambit of provisions of Section 9(1)(vii) r.w. Section 5 of the Act. 9.2 Plethora of judgments govern the field on the issue. Useful reference can be made to the decision rendered by the Co-ordinate Bench in CIT vs. EON Technology P. Ltd., (2011) 15 taxmann.com 391 (Del) and in the case of Prithvi Information Solutions Ltd. Vs. ITO (2014) 47 taxmann.com 214 (HYD.); Well Spring Universal vs. JCIT (2015) 56 taxmann.com 174. 9.3 Under the provisions of s. 195 of the Act, taxes are required to be deducted at source on the payments made to non resident, only if the income payable to the non resident is chargeable to tax in India. The income is chargeable to tax in India in the hands of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of Rs. 2,52,249/- on the basis of 1% of average value of investment from which tax free dividend income was received. The assessee thus contends that in view of suo motu disallowance which far exceeds the exempt income, no further disallowance is permissible under Section 14A r.w. Rule 8D of the Income Tax Rules, 1963. 11.2 In the light of the submissions made on behalf of the assessee, no further disallowance under Section 14A is called for in the light of the judgment rendered in the case of Joint Investments P. Ltd. Vs. CIT, (2015) 372 ITR 694 (Del) and Pr.CIT vs. Caraf Builders and Constructions P. Ltd. (2019) 414 ITR 122 (Del) (SLP dismissed by SC). It is well settled law that disallowance under Section 14A can be made only in respect of those investments which have yielded tax free income during the year as held in Caraf Builders (supra) and ACB India Ltd. vs. ACIT (2015) 374 ITR 108 (Del). The AO is thus directed to delete the disallowance under Section 14A made over and above the disallowance offered by the assessee. 11.3 Ground No.3 of the appeal of the assessee is allowed. 11. The facts being identical, the disallowance under Section 14A in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee, we also notice the assertions made on behalf of the assessee that similar claim has been allowed in the earlier years by the AO. No reason to take different stance in captioned assessment year has been brought to our notice. Thus, contrary view is not warranted. 12.5 We thus find force in the plea of the assessee for reversal of such disallowance. We direct the AO accordingly. 12.6 Ground no.4 is allowed. 15. In accord with the position obtained in AY 2017-18 in assessee s own case, the addition made towards ESOP expenses are allowed. 16. Ground No.4 is thus allowed. 17. Ground No.5 concerns adjustment of Rs. 45,23,261/- on account of commission on standby letter of credit. 18. The Co-ordinate Bench of Tribunal has dealt with the identical issue in assessee s own case in Assessment Year 2017-18 as under: 14. Ground No.6 concerns adjustment of Rs. 23,06,351/- on account of commission on standby letter of credit. 14.1 The Transfer Pricing Officer (TPO) observed that the assessee has claimed Rs. 68,64,578/- incurred by it towards bank charges paid to bankers for standby letter of credit. While incurring such expenses, the assessee has n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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