2014 (7) TMI 1067

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....cals. Assessee filed his return of income for A.Y. 2007-08 on 29.10.2007 declaring total income of Rs. 51,19,360/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 30.12.2009 and the total income was determined at Rs. 57,40,744/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) vide order dated 03.08.2010 granted partial relief to the Assessee. Aggrieved by the order of CIT(A), Assessee is now in appeal before us and has raised the following grounds:-         1. That on facts and circumstances of the case, the learned CIT (A) has erred in not admitting the contention of the appellant and thereby confirming....

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....DS on such payment. In response to the query raised by A.O, Assessee interalia submitted that the parties to whom the commission have been paid have Permanent Establishment overseas and the services have also been provided overseas and they have no branches or representative in India and therefore on the commission paid to them no TDS was applicable. The submissions of the Assessee was not found acceptable to the A.O. A.O was of the view that the commission income of the foreign person was chargeable to tax in India as per the provisions of Section 9 & 5 of the I.T. Act. Further the commission was liable for TDS under section 195 of the Act. Since the Assessee has not deducted TDS, the commission paid to non resident was not allowable u/s. ....

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.... for booking sales order on behalf of the Assessee out of India both the parties have not provided any technical services and they have no permanent establishment in India. It was further submitted that the agents only booked sales order on behalf of Assessee and the Assessee has not received any technical services. It was further submitted that the provisions of Section 9(1)(vi)/(vii) have no application as the amount that was paid was neither royalty nor fees for technical services but was a business income. It was also submitted that the foreign sales agents have no business activity or Permanent Establishment in India. It was further submitted that Assessee had relied on CBDTs Circular No. 786 dated 07.02.2000 for non deduction of tax a....

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....x was not deducted because income tax is deductible at source only from payments which are chargeable to tax under Income Tax Act. It was submitted that the amount was paid for commission in foreign currency was not chargeable to tax in India because these payments represented business income of non-resident and that none of the payees have permanent establishment or business connection in India within the meaning of section 9 of the IT Act. It was also explained that non-residents were not chargeable to tax in India due to various Double Taxation Agreements. It was also explained that payments were not for royalty or technical know-how and therefore, tax was not liable to be deducted. It was also submitted that the assessee did not deduct ....