TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) whether deduction under section 80HHC in the case of tea business was to be computed with reference to income before application of Rule 8 of the Income-tax Rules, 1962; and (ii) whether commission, brokerage, warehousing charges and selling expenses paid to non-resident foreign agents for services rendered outside India were liable to tax deduction at source under section 195 of the Income-tax Act, 1961, so as to attract disallowance under section 40(a)(i) of the Income-tax Act, 1961.
Issue (i): whether deduction under section 80HHC in the case of tea business was to be computed with reference to income before application of Rule 8 of the Income-tax Rules, 1962.
Analysis: The Tribunal followed the jurisdictional High Court, which had held that in the case of growing and manufacture of tea, deduction under section 80HHC is to be worked out with reference to the income before application of Rule 8. The earlier view of the Tribunal stood displaced by the binding High Court decision.
Conclusion: The issue was decided in favour of the assessee and against the Revenue.
Issue (ii): whether commission, brokerage, warehousing charges and selling expenses paid to non-resident foreign agents for services rendered outside India were liable to tax deduction at source under section 195 of the Income-tax Act, 1961, so as to attract disallowance under section 40(a)(i) of the Income-tax Act, 1961.
Analysis: The foreign agents operated outside India and rendered services outside India. The payments were made in respect of export sales, with approval of the Reserve Bank of India, and the Board circulars clarified that where no part of the non-resident agent's income arises in India, no tax is deductible under section 195. In the absence of income chargeable to tax in India, disallowance under section 40(a)(i) could not be sustained.
Conclusion: The issue was decided in favour of the assessee and against the Revenue.
Final Conclusion: The Revenue's objections failed on the merits of the two substantive issues considered, and the assessee's position was sustained in full on those points.
Ratio Decidendi: Where non-resident agents render services outside India and no income accrues or arises in India, no tax is deductible under section 195 of the Income-tax Act, 1961, and disallowance under section 40(a)(i) cannot be made; in tea business cases, section 80HHC deduction is computed with reference to income before application of Rule 8 when so directed by binding jurisdictional precedent.
TaxTMI 
TaxTMI 
