In the case of Hyderabad Industries Ltd. (supra) also ITAT, Hyderabad Bench held the similar view. In the present case, the AO has failed to bring any material on record on the basis of which it could be concluded that commission paid to foreign agents is chargeable to tax in India. Unless the income is chargeable to tax in India, then tax is not required to be deducted u/s 195(1). From the facts and materials available on record, no definite conclusion can be made that the commission paid to foreign agents is chargeable to tax in India. Therefore, the disallowance made u/s 40(a)(i) is not sustainable. Hence, there is no reason to interfere with the finding of the CIT(A) on this issue. The grounds raised by the revenue are rejected.
It is also a fact that the assessing officer initiated the recovery proceedings without passing any order on the stay application of the assessee. It is also a fact that the recovery proceedings under S. 220(6) were initiated without attending to or expressly rejecting the stay application filed by the assessee before the assessing officer. In our opinion, this approach is certainly not appreciated.
The first issue before us is whether the assessee is a developer and builder and, thus, entitled to deduction u/s. 80IB(10) qua the Sadguru Krupa Project, or only a Contractor and, thus, not so entitled. No argument, much less materials, has been advanced or adduced before us
The main issue is with regard to allowability of foreign travel expenditure. The assessee claimed foreign travel expenditure at Rs. 20,35,971. As the assessee not furnished details of expenditure relating to business and pleasure trips, the Assessing Officer disallowed 80% of foreign travel expenses at Rs. 16,28,777. On appeal, the CIT(A) directed the Assessing Officer to allow 1/3rd of the expenditure instead of 1/5th of the expenditure. Against this the assessee is in appeal before us.
Regarding allowability of exemption u/s. 10(23C)(iiiad)/(vi), we are of the opinion that there is no allegation that the assessee is not imparting education. The argument of the Department is that some benefit given to the founder member of the trust disables the trust from getting exemption u/s. 10(23C)(iiiad)/(vi).
The learned DR strongly defending the order passed by the CIT (A) submitted that the assessee has deliberately made excess payment to its AE with an intention to reduce its profit. The learned DR submitted that the CIT (A) after considering all aspects has correctly determined the ALP.
Assessees have made several transactions of purchase of shares during the relevant year under consideration, and if there high volume, frequency and regularity of the activity carried on by the assessees in a systematic manner, it would partake the character of business activities carried on by the assessee in shares, and it cannot be said that the assessees have merely made investments in shares.
S.80IB(3)(ii) provides for deduction to small scale industrial units engaged in manufacture or producing articles or things. S.80IB(14)(b) defines a small scale industrial undertaking, which is regarded as such under S.11B of the Industries(Development and Regulation) Act, 1951.
The economic problems of milk producers are such that the Parliament/CBDT felt it necessary to incorporate that milk producer should be free to receive payments in cash. Of course, such exclusion from the rigour of the provisions of section 40A(3), is subjected to certain conditions.
As per the provisions of sec 35(2AB) of Act as applicable to the relevant Assessment year, the expenditure incurred by the assessee in any approved in-house research facility, to the extent of approved by the prescribed authority, is entitled to weighted deduction of 150% of such approved expenditure. Therefore, the expenditure as approved by the DSIR in the certificate given by them in Form 3CL alone is to be granted weighted deduction.
