TaxTMI 
TaxTMI 
2014 (4) TMI 1092
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....13,456/ commission paid of foreign agent and Rs. 11,559/- of late payment of interest to the same agent made by AO invoking provisions of section 40(a)(ia) of the Act. The ld. CIT(A) failed to appreciate the reliance placed by the appellant n Board Circular No 786 that exempted the appellant from deduction of tax at source from payments made to foreign agent. Both the lower authorities further erred in not appreciating the fact that the appellant had duly deducted and deposited the tax into the Government treasury before due date of filing of return. This action of ld. CIT(A) being without any merits or justification and against principles of natural justice deserves to be deleted." 3. The facts in brief as emerged from the corresponding....
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....he provisions of section 40(a)(ia) of the I.T. Act. Against, the said disallowance of Rs. 8,13,456/- the assessee has gone in appeal. It is also worth to mention that the assessee had also claimed payment of interest of Rs. 11,559/- to M/s Pets News Agencies for delayed payment. On the same reasoning, the Assessing Officer had also disallowed the interest payment by invoking the provisions of section 40(a)(ia). 4. Before the Ld. CIT(A), it was reiterated that in the light of circular no. 786 dated 07.02.2000, the assessee was not required to deduct the tax because the deductees were the foreign agent and the payment of commission was for the purpose of securing orders in various countries. Further, a decision of Hon'ble Delhi High Court ....
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....gent for rendering services abroad. This circular says: "The deduction of tax at source under section 195 would arise if the payment of commission to the nonresident agent is chargeable to tax in India. In this regard attention to CBDT Circular No. 23 dated 23rd July, 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 held to be not taxable in India. The....
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....9 taxmann.com 341 (Luck.) wherein it was held as under: "Held that as per the CBDT Circular No. 23, dated 23.07.1969 and Circular No. 786 dated 7.2.2000, the assessee was not required to deduct the tax at source under section 95 with regard to payment of commission to foreign agent. It was worth mentioning that the previous year involved was 2006-07 relevant to the assessment year under consideration. At the relevant time, in view of the CBDT Circular No. 23, dated 23.07.1969 and Circular No. 786, dated 7.2.2000, the assessee was not obliged to deduct the tax under section 195 and Circular No. 786 of 2000 will be operative only from 22-10-2009 and not prior to that date. Hence, disallowance made by the Assessing Officer was to e ca....
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.... Respectfully following the above decisions in a situation when the assessee's status of non-resident was not in dispute and that the assessee had given the copy of the agreement, details of the services rendered, correspondence for services availed alongwith supporting evidence, and moreover at that relevant time when the TDS was required to be deducted, the said CBDT circular was in operation, we hereby hold that the invocation of the provisions of section 40(a)(ia) read with section 195(2) was incorrect. The findings of the authorities below are hereby reversed and this ground of appeal of assessee is allowed. 6. Ground no. 2 of the appeal is reproduced below: "Learned CIT(A) has erred in law and on facts in not adjudicati....