TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 255
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.... on account of commission paid to non-resident u/s 40(a)(ia) of the I.T. Act, 1961. (ii) On the facts and in the circumstances of the case and in law, the CIT(A)-II, Thane erred in not appreciating the fact that circular No. 7 of 2009 dated 22.10.2009 clearly stipulates that earlier circulars have been withdrawn with immediate effect, meaning thereby that the benefits of earlier circulars are not applicable to the assessee on the date of order. (iii) On the facts and in the circumstances of the case and in law, the CIT(A)-II, Thane erred in holding that provisions of section 9 r.w explanation 2 of the I.T. Act, 1961 are not applicable to the assessee's case. 2. The only issue arises from the ground raised by the revenue is regarding addi....
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....on does not fall under clauses (v ) to (vii) of section 9(1), therefore, the Explanation 2 to the said section is not applicable. CIT(A) was of the view that the payment in question is not the fee for technical services or royalty, therefore, the Explanation is not applicable. CIT(A) has also considered the provisions of DTAA between India and UAE and held that when the services are rendered outside India, therefore, as per the DTAA between India and UAE the income arising out of the transaction between assessee and the non resident is not liable to tax in India, therefore, not subjected to provisions of deduction of tax at source and consequently the provisions of section 40(a)(ia) are not applicable. 4. Before us, the Ld DR has submitted....
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.... being commission paid to M/s Luminous General Trading Co. (LLC) and, therefore, the said payment does not fall under the clause (v) to (vii) of section 9(1) so that the Explanation 2 can be attracted on this amount. He has further submitted that Circular No. 786 of 7.2.2000 was withdrawn on 22.10.2009 and, therefore, the withdrawal of the Circular is prospective and not retrospective. The assessee cannot be supposed to have deducted the tax in respect of the commission paid to the non resident agent when during the relevant year, the Circular No. 786 dated 7.2.2000 was very much in existence. The subsequent withdrawal of the Circular does not affect the position of the Department and CBDT on this issue during the year under consideration. ....
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....d investigation of records and facts for its adjudication and, therefore, in the absence of any finding by the authorities below or any material produced before us in support of a fresh contention, it is not possible to entertain and adjudicate the same. When the AO has not disputed the nature of payment being commission then in the absence of any material/record to show that the real nature of payment is not commission, we are not inclined to entertain a fresh plea raised by the Ld. DR. We further note that the Ld. DR has also raised a contention that the benefit of DTAA is not available to the recipient of the amount in the absence of tax resident certificate. Since no such question was either raised by the AO or by CIT(A) and, therefore,....
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....ssion is relevant only for the purpose of remittance in foreign exchange and is not relevant for determination of the allowability of the expenditure under the Income Tax Act. Once the remittance was allowed even more than limit provided by the RBI guidelines the same becomes irrelevant for the purpose of allowability of the expenditure under the Income Tax Act. So far as the withdrawal of Circular No. 786 by a subsequent Circular 7/2009 dated 22.10.2009 is concerned, we note that the Hon'ble Delhi High Court in the case of CIT Vs. Angelique International Ltd. (supra) had the occasion to consider this issue and held that the Circular no. 7 of 2009 whereby the Circular No. 789 has been withdrawn did not have retrospective effect in para 9 an....
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.... income, TDS was not required to be deducted. We also note that the payments in question were made prior to circular No. 7/2009. On this aspect, there is no dispute. We, therefore, do not find any reason to interfere with the order passed by the tribunal deleting the addition made by the Assessing Officer under Section 40(a)(i) of the Act. The appeal, being devoid of merit, is dismissed. 9. Even otherwise at the time of remittance of the amount in question the Circular No. 786 was very much inforce and existence and, therefore, the assessee cannot be expected to deduct tax at source on the commission paid to the non resident agent. A similar view has been taken by the Hon'ble Allahabad High Court in the case of CIT V/s. Model Exims (supra)....