2015 (7) TMI 988

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....by it on 01.10.2010 declaring total loss of Rs. 1,85,77,915. In the assessment originally completed under section 143(3) on 28.03.2013, the total income of the assessee was determined by the A.O. at Rs.(-)1,74,65,307. The record of the said assessment came to be subsequently examined by the Ld.CIT and on such examination, he was of the opinion that the order passed by the A.O. under section 143(3) suffered from the following error which was prejudicial to the interests of the Revenue. "Information available on record indicates that the sales commission of Rs. 59,40,886/- was paid to the agents outside India and the assessee failed to deduct tax at source as required under the provisions of Section 195 of the I.T. Act. Hence, it is liable t....

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....paid to a foreign agent without deduction of tax for services rendered outside India cannot be disallowed under section 40(a)(ia) of the Income Tax Act, 1961. You may kindly appreciate that section 195 of the Act has to be read along with the charging sections 4, 5 and 9 of the Act. Section 95 of the Act clearly provides that unless the income is chargeable to tax in India, there is no obligation to withhold tax. In order to determine whether income could be deemed to accrue or arise in India, section 9 of the Act is the basis. Further basic conditions under section 9 of the Act with respect to accruing of income in India namely connection with the property in India and control and management invested in India ar~ not satisfied in the prese....

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....Therefore the law relating to withholding of tax under section 195 of the Act has not been changed consequent to withdrawl of earlier circulars on this issue by CBDT and therefore the disallowance of expenditure under section 40(a)(ia) of the Act is not attracted for payments made. to the non-resident agents by the assessee without deduction of tax there on." 2.2. The above explanation offered by the assessee was not found acceptable by the Ld.CIT for the following reasons given in paragraph 6 of his impugned order. "6. I have gone through the facts of the case, assessment record and submissions of the A.R. on the issue involved. The case was picked up for scrutiny to examine the genuineness of commission expenses claimed. However, it is ....

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.....3. For the reasons given above and relying inter alia, on the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd., vs. CIT 243 ITR 83 (SC), he set aside the order dated 28.03.2013 passed by the A.O. under section 143(3) with a direction to the A.O. to re-do the same as per Law after proper examination of the facts and application of appropriate Law. Aggrieved by the order of the Ld.CIT passed under section 263, the assessee has preferred this appeal before the Tribunal. 3. We have heard the arguments of both the sides and also perused the relevant material on record. The Ld. Counsel for the assessee at the outset has submitted that the issue raised in the present case by the Ld.CIT in his impugned order passed und....