TaxTMI 
TaxTMI 
2013 (7) TMI 615
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....ssioner of Income Tax (Appeals) erred in law in sustaining the addition of Rs.3,42,821/- paid as export commission:- (a) Holding that the payment of export commission is subject to tax deduction at source in terms of Section 195; (b) Holding that Section 40(a)(i) of the Act, is attracted in respect of said payment; (c) Holding that the services rendered by the foreign agent outside India for securing export orders, shall be deemed to accrue or arise in India within the meaning of Section 9 of the Income Tax Act." 3. Ground No.2 is only argument in support of above ground No.1. 4. At the time of hearing before us, it is submitted by the learned counsel that this issue is squarely covered in favour of the assessee by the decisi....
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....e balance sheet prepared in India. Explanation 1 is a complete answer to the observations of the Assessing Officer that commission income had accrued, arisen or was received by ETUK in India because it was recorded in the books of assessee in India or was paid by the assessee situated in India. Section 9 postulates and states when income is deemed to arise in India. The Assessing Officer has not mentioned any specific provision of section 9 but it appears that he had invoked section 9(1)(i). For the said provision to apply, the Assessing Officer was required to examine whether the said commission income is accruing or arising directly or indirectly from any business connection in India. The Assessing Officer has not dealt with or exam....
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.... by the Supreme Court to mean something more than mere business and is not equivalent to carrying on business, but a relationship between the business carried on by a non- resident, which yields profits and gains and some activities in India, which contributes directly or indirectly to the earning of those profits or gains. It predicates an element of continuity between the business of the non-resident and the activity in India. The test which is to be applied is to examine the activities in India and whether the said activities have contributed to the business income earned by the non-resident, which has accrued, arisen or received outside India. The business connection must be real and intimate from which the income had arisen directly....
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....eduction if it could have been paid as profit or dividend." 9. We have heard both the parties and perused the material placed before us. We find that this issue is also covered in favour of the assessee by the decision of Hon'ble Jurisdictional High Court in the case of AMD Metplast P.Ltd. Vs. DCIT - [2012] 341 ITR 563 (Delhi), wherein their Lordships held as under:- "allowing the appeal, that A was the managing director and in terms of the board resolution was entitled to receive commission for services rendered to the company. It was a term of employment on the basis of which he had rendered service. Accordingly, he was entitled to the amount. Commission was treated as a part and parcel of salary and tax had been deducted at source.....