2010 (12) TMI 1171

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....(i) of the Act. 3. The facts of the case, in brief, are that the assessee is engaged in manufacture of wheels of automobiles. The assessee has claimed sales commission of ₹ 1,05,23,000/- u/s 40(a)(i) of the Act, being the payment made without deduction of tax at source. The Assessing Officer was not satisfied with the explanation of the assessee that this amount paid would not be chargeable to tax in India. The details of commission paid are as under: (a) Isun Trading Corporation - South Korea 125522 US$ ₹ 59,59,004 (b) B&B Sales - USA 16657 US$ ₹ 7,57,883 (c) V.C. Edwards Pte Ltd Singapore 81026 US$ ₹ 37,67,444 (d) M/s Associated Auto Parts LLC- Dubai 835US$ ₹ 37,956 4. The case of the assess....

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....he nature of business profits is taxable only in those countries and not in India. The assessee has also relied on CBDT Circular No.786 of 2000 dated 7.2.2000 which clarified the correct legal position on the question of deduction of the tax at source under section 195. But the Assessing Officer was not satisfied and disallowed the impugned payment and made the addition in respect thereof. This addition was deleted by the ld. CIT(A) after following various decisions. Now the Revenue is aggrieved. 5. We have considered the rival submissions and the material available on record. It was found that the issue in question is squarely covered by the decision of Hon'ble Supreme Court in the case of GE India Technology Centre(P) Ltd vs CIT, [20....

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.... effect of DTAA in respect of payment of royalties and technical fees while deducting tax at source. The application of s. 195(2) pre-supposes that the person responsible for making the payment to the non-resident is in no doubt that tax is payable in respect of some part of the amount to be remitted to a nonresident but is not sure as to what should be the portion so taxable or is not sure as to the amount of tax to be deducted. In such a situation, he is required to make an application to the ITO(TDS) for determining the amount. It is only when these conditions are satisfied and an application is made to the ITO(TDS) that the question of making an order under s. 195(2) will arise. While deciding the scope of s. 195(2) it is important to n....