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ITAT upheld disallowance which it considered as reasonable
ITAT upheld disallowance which it considered as reasonable
AO noted that Synergy Lifestyle Pvt Ltd had received dividend income of Rs.23,72,210 which was claimed as exempt. AO treated same as business income. The matter travelled to Tribunal which directed AO to treat dividend income as exempt u/s 10(34)/(35). AO computed disallowance u/s 14A r.w. Rule 8D at Rs.7,34,274. CIT(A) restricted disallowance at Rs.1,32,609. ITAT upheld disallowance which it considered as reasonable.-500618
1. AO noted that the Synergy Lifestyle Pvt Ltd had received dividend income of Rs.23,72,210 which was claimed as exempt.
2. AO treated the same as business income.
3. The matter travelled to the Tribunal and the Tribunal directed the AO to treat the dividend income as exempt u/s 10(34)/(35).
4. AO computed the disallowance u/s 14A r.w. Rule 8D at Rs.7,34,274.
5. AO in set aside proceedings observed that assessee had failed to produce sufficient evidence regarding nature of services rendered by foreign parties to assessee.
6. AO also observed that assessee had not deducted TDS on the said payments.
7. AO made disallowance.
8. CIT(A) restricted the disallowance at Rs.1,32,609. And deleted the disallowance of commission.
On appeal, the ITAT held as under:
9. We find that the assessee had made investments in mutual funds only which yielded dividend income.
10. In our view, the Ld. CIT(A), in the light of the decision of the Hon'ble Bombay High Court in the case of "Godrej & Boyce Manufacturing Co. Ltd." (supra), has fairly computed the reasonable disallowance under section 14A which does not require any interference at our level.
11. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) on this issue and the same is therefore upheld.
12. We find that there is no infirmity in the well reasoned order of the Ld. CIT(A).
13. Even the issue is squarely covered by the decision of the co-ordinate bench of the Tribunal in the case of "Indo Industries Ltd. vs. ITO" wherein it has been categorically held that where the assessee made payments of commission to foreign agents for rendering services relating to export sales outside India and since the said agents did not have PE in India, no taxable income accrued or arose to them in India and therefore the assessee was not required to deduct TDS while making payments to such foreign agents.
Case Reference - Dy. Commissioner of Income Tax vs M/s. Synergy Lifestyle Pvt. Ltd.
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "E", MUMBAI
BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
ITA No. 5440/M/2013
(Assessment Year: 2005-06)
