2013 (11) TMI 307

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....ducts, had filed its return for impugned assessment year declaring an income of Rs. 45,66,550/-. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had paid sales commission of Rs. 58,02,597/- to agents abroad. As per A.O., assessee failed to deduct tax at source. Though assessee had relied on Circular No.786 dated 7.2.2000 for non-deduction of tax at source, the A.O. was not impressed. According to him, Circular No.7/2009 dated 22.10.2009 had made Circular No.23 dated 23.7.1969 and Circular No.786 dated 7.2.2000 redundant. When the source of income emanated from business activities of the assessee in India, the taxability of income was governed by Section 9 of the Act. Assessee having not deduc....

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....ding to him, had retrospective effect from 1.6.1976. The requirement that non-residents should have rendered services in India for bringing such non-residents within the ambit of Indian taxation, stood obviated. According to him, the services rendered by the non-resident agents to the assessee fitted within the definition of "fees for technical services" given under Explanation (2) to Section 9(1)(vii) of the Act. The said foreign agents were rendering managerial services to the assessee. Therefore, assessee should have deducted tax at source as stipulated under Section 195 of the Act. Having not done so, Assessing Officer was justified in applying Section 40a(i) for making a disallowance. Learned D.R. submitted that the CIT(Appeals) fell i....