2014 (9) TMI 96

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....original assessment order was passed under Section 143(3) of the Income Tax Act (for brevity, the Act ) on 8.10.2010 accepting the total income declared by the assessee. 2.2. On 15.2.2013, the Commissioner of Income Tax-I, Coimbatore issued a show cause notice under Section 263 of the Act stating that there is an error in the assessment order in accepting the claim for deduction, being the foreign agency commission paid to non-resident foreign companies, as tax deduction at source was not made in respect of such payment and, therefore, it caused loss to the revenue. The objections of the assessee were considered and an order was passed on 27.3.2013 in terms of Section 263 of the Act, setting aside the assessment order and directing the Ass....

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.... correct in deleting the disallowance made by the assessing officer towards export commission paid by the assessee to the non resident on which it failed to deduct tax at source?" 3. We have heard the arguments of Mr.T.R.Senthilkumar, learned Senior Standing Counsel appearing for the appellant and Mr.S.Sridhar, learned counsel for the respondent. 4. The fact that the assessee paid amount by way of commission to foreign agents for services rendered outside India, as recorded in the assessment order and the order of the Tribunal, is not disputed. A similar issue was considered by us in the case of The Commissioner of Income Tax v. Faizan Shoes Private Limited (T.C.(A) No.789 of 2013, dated 22.7.2014), wherein after considering the Section 9....

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....ire income accruing therefrom shall be deemed to have accrued in India. If however, all the operations are not carried out in the taxable territories, the profits and gains of business deemed to accrue in India through and from business connection in India shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. If no operations of business are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any business connection in India cannot be deemed to accrue or arise in India (See CIT v. R. D. Aggarwal and Co. [1965] 56 ITR 20 (SC) and Carborandum Co. v. CIT [1977] 108 ITR 335 (SC) which are decided on the ....