Just a moment...

Report
FeedbackReport
Bars
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2011 (1) TMI 1332

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ement of Export Order without appreciating the facts brought on record by the Assessing Officer during the course of assessment proceedings. 2. That the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has failed to take into account the contents of the Board's Circular No. 7/2009, vide which CBDT withdrew its earlier circulars in this matter, and clarifies the correct legal position. 3. That the order of the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur is erroneous in law and on facts as Ld. CIT(A)-II, Kanpur has ignored the ratio of the judgment passed by the Hon'ble Supreme Court in the case of CIT Vs Gold Coin Health Food Pvt.Ltd.(2008) 304 ITR 308(SC) wherein the issue of retrospective application of Board's Cir....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....at no part of commission paid to non-resident agent either accrued or arose in India or deemed to accrue or arise in India under Section 9 of the act and thus, was not taxable in India. It was also one of the contention of the assessee before the AO that the non-resident agent did not have any connection in India, hence, liability to deduct tax at source on the assessee did not arise. The AO has passed a detailed order while making the disallowance. He has also relied on the decision of the I.T.A.T., Delhi Bench in the case of Van Oord ACZ India (P.) Ltd. vs. Addl.CIT (2009) (2008) 112 ITD 79 (Del.). The AO concluded that where deduction is required to be made under Section 195(1), the same cannot be avoided unless 'nil' deduction or deduct....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ign agent was based on the decision of the I.T.A.T., Delhi Bench in the case of Van Oord ACZ India (P.)Ltd. vs. ACIT (2008),112 ITD 79 (Del.), which has been overruled by the Hon'ble Delhi High Court, which is reported in (2010) 230 CTR (Del.) 365. (vi) That the tax was not required to be deducted in view of the CBDT clarification vide circular No.23 dated 23.7.1969 and circular No.786 dated 7.2.2000 for non-deduction of tax at source under Section 195 with regard to payment of commission to foreign agent. (vii) That subsequent withdrawal of the above circulars, vide circular no.7 of 2009 dated 22.10.2009 does not alter the legal position. Moreover, when the assessee made the commission payments to the foreign agent, the aforesaid Boa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ent. Disallowance u/s 40(a)(i) is, therefore, deleted. " 7. We have heard the rival submissions. Shri P.K.Bajaj, ld.D.R. heavily relied on the order of the AO. On the other hand, Shri Vikas Garg, C.A. and Shri Swarn Singh, C.A.,ld. Counsels for the assessee reiterated the submissions made before the lower authorities. It was further submitted that the issuance of circular No.7of 2009 dated 22.10.2009 withdrawing the circular No.23 of 1969, 163 of 1975 and 786 of 2000 will be operative only from 22.10.2009 and not prior to that date. Reliance was placed on the decision of the I.T.A.T., Mumbai Bench in the case of Dy.CIT vs. M/s.Siemens Aktiengeselschaft (2010)-TIOL-102-ITAT- MUM. We find that as per the CBDT circular No.23 dated 23.7.1969 a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....milar view, on the same set of facts has been taken by some assessing officers in other charges. 2. The deduction of tax at source under section 195 would arise if the payment of commission to the non-resident agent is chargeable to tax in India. In this regard attention to CBDT Circular No. 23, dated 23-7-1969, is drawn, where the taxability of "Foreign Agents of Indian Exporters" was considered alongwith certain other specific situations. It had been clarified then that where the non-resident agent operates outside the country, no part of his income arises in India. Further, since the payment is usually remitted directly abroad it cannot be held to have been received by or on behalf of the agent in India. Such payments were, therefore he....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....either withdrawing or modifying the earlier circulars have no application. Similar view has been taken in CIT vs. Geeva Films, (1983) 141 ITR 632(Ker.) and CIT vs. B.M.Edward India Sea Foods, (1979), 119 ITR 334 (Ker.)(F.B.). 7.2 In the case of M/s. Siemens Aktiengesellschaft (supra), while deciding a similar issue, the Tribunal held that it is axiomatic that a circular in operation through the relevant assessment year cannot be held to be inoperational simply by reason of the fact that it has been withdrawn in the year 2009. The withdrawal of such circulars will be effective only after the said date of 22nd October,2009 by which these circulars have been withdrawn 'with immediate effect'. Accordingly, the Mumbai Bench of the Tribunal held....