TaxTMI 
TaxTMI 
2015 (10) TMI 166
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....CIT(A) against the assessment order passed by the AO under Section 143(3) of the Income Tax Act, 1961 (the Act), the other appeal relates to the order passed by the ld. CIT(A) against the rectification order passed under section 154 of the Act. 2. We shall first take up the appeal filed by the Assessee in ITA No.9054/Mum/2010. The Assessee is aggrieved by the decision of the ld. CIT(A) in confirming the disallowance of commission amount of Rs. 85,80,661/- paid to foreign agents without deduction of tax at source. 3. The facts relating to the same are stated in brief. During the course of assessment proceedings, the AO noticed that the assessee has paid commission of Rs. 85,80,661/- to the foreign parties against export of cotton and c....
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....under section 40(a)(i) of the Act for non deduction of tax at source. Accordingly, the AO disallowed the commission expenditure of Rs. 85,80,661/-. 4. In the appeal filed by the assessee, the ld. CIT(A) took the view that the foreign agents are providing composite services comprising of commission agency and services for promoting sales of the assessee in foreign countries, although nomenclature used by the assessee was 'Commission'. He further held that the payments made by Assessee to foreign parties are taxable in India. Accordingly, he upheld the disallowance made u/s 40(a)(i) of the Act and hence dismissed the appeal filed by the Assessee. Aggrieved, the assessee is in appeal before us. 5. We have heard the rival contentions and ....
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....s have presumed that the foreign agents were rendering some other kind of services also. He submitted that they have drawn this kind of inference on surmises and conjectures only. We find force in the said contentions of the ld. AR. We notice that the assessing officer or Ld CIT(A) has not brought any material on record to substantiate their views that some other kind of services were also rendered by the foreign agents. Hence, we have to agree with the submission of the assessee that the commission amounts were paid for procuring sales orders. Hence, by following the decision rendered by the Hon'ble Madras High Court (referred supra) and also the decision rendered by the Delhi bench of Tribunal (supra), we hold that the payment made for te....
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....e of insertion of the Explanation u/s 9(2) of the Act with retrospective effect. However, the details of payment of commission amounts are not available on record. In any case, we are inclined to follow the ratio of the above said decisions in the instant case also. 7. The ld. AR submitted that the assessee has placed reliance on the circular No. 22 of 1969, 103 of 1975 and 76 of 2007 issued by the CBDT, wherein the CBDT has expressed the view that the commission payments made to foreign agents for services rendered outside India are not liable to tax in India. However, the above said circulars were subsequently withdrawn by CBDT, vide its circular No.7 of 2009 dated 22.10.2009. The Ld A.R submitted that the impugned commission payments ....
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.... made u/s 40(a)(i) was short disallowed by Rs. 13,29,918/- i.e. the AO omitted to make disallowance of the above said amount also for nondeduction of tax at source u/s 195 of the Act. The above said amount also represents commission payments made to foreign agents. Since in the earlier paragraphs, we have held that the Assessee is not liable to deduct tax at source u/s 195 of the Act from the commission payments made to the foreign agents during the year under consideration, the order of ld. CIT(A) in respect of the above said issue is liable to be set aside. Accordingly, we set aside the order of ld. CIT(A) and direct the AO to delete the addition made in the rectification order. 11. The ld. AR also submitted that the question whether t....