2014 (6) TMI 643

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.... the "Act"]. 2. The Revenue's sole substantive ground challenges order of the Commissioner of Income Tax (Appeals) in deleting disallowance under section 40(a)(i) for non deduction of TDS made by the Assessing Officer in assessment order dated 19.12.2011. 3. The assessee; a 'company', is engaged in the business of tanning and export of finished leather. On 30.09.2009, it had filed its 'return' disclosing income of I.28,49,350/-. The same was 'summarily' processed. 4. In scrutiny, the Assessing Officer noticed from assessee's profit and loss account commission payments of I.1,11,35,441/- made to its overseas agents situated in various countries like Australia, Italy, Portugual, S. Korea etc. without deducting any TDS. The assessee h....

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....ew, its agency agreements not only involved export procurement orders but also rendering of specialized technical services in the nature of furnishing changes in fashion & market trends in overseas markets. Thereafter, he quoted definition of fees for technical services in various double taxation avoidance agreements as well as Sec. 9(i)(vii)(b) to observe that both income as well as earning activity were situated inside India which proved direct nexus between payments and the income earned. In these circumstances, he held the assessee ought to have deducted TDS while making impugned export commission payment and failure thereof attracted disallowance under section 40(a)(i). Thus, he added this sum of I.1,11,35,441/- in assessee' s income. ....