TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 94
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....sakhapatnam) [SB]. In our opinion, there is a force in the argument of the ld.A.R and the Special Bench cited supra considered this issue and decided the issue in favour of the assessee. Further, the Co-ordinate Bench of this Tribunal in the case of Shri N.Palanivelu Vs. ITO reported in [2015] 40 ITR (Trib) 325 [Chennai] vide order dated 29.04.2015 wherein held that:- "4. We have heard both sides and perused the material on record. We find that the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports v. Addl. CIT [2012] 16 ITR (Trib) 1 (Visakhapatnam) [SB] and judgment of the Gujarat High Court in the case of CIT v. Vector Shipping Services (P.) Ltd. in I. T. A. Nos. 122 of 2013 dated July 9, 2013 [2013] 357 ITR 642 (All) held that section 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessment year in respect of these payments. However, the assessee has not brought on record, the details of outstanding expenses or schedule of sundry creditors showing whether the impugned amount is outstanding at the end of the close of the previous year relevant to the assessment year either in the na....
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....aid for technical services only and the assessee is liable for deduction of TDS u/s.195 of the Act. For this proposition, he relied on the judgment of Delhi High Court in the case of M/s.Havells (India) Ltd., reported in 352 ITR 376 wherein held that the fees paid by the assessee to the US Company on account of testing and certification services is taxable in the hands of the US Company in India and assessee was liable to deduct tax at source while making payment thereof, since the export activities have been fulfilled in India, source of income was located in India and not outside India, and the mere fact that export proceeds emanated from persons situated outside India did not constitute them as source of income. 7. We have heard both the parties and perused the material on record. In our opinion, the issue is squarely covered by the judgment of Delhi High Court in the case of M/s.Havells (India) Ltd. cited supra wherein after elaborate discussions held as follows:- "11. The judgment of the Madras High Court certainly supports the contention of the learned counsel for the assessee. In an earlier judgment in CITv. Anglo French Textiles [1993] 199 ITR 785 (Mad), a Division Bench....
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.... Revenue before the High Court that the import entitlement should be regarded as a source of income in the taxable territories and under section 9(1) of the Act, the income arising out of the encashment of the import entitlements should be deemed to accrue or arise in the taxable territories. This argument was also rejected by the Madras High Court which held (page 795) : "Equally, it is difficult to regard the import entitlements as a source of income which should be looked at from a practical view-point and not merely as an abstract legal concept. We are, therefore, unable to agree with the contention of the learned counsel for the Revenue that the import entitlements constituted a source of income within the meaning of section 9 of the Act as to deem the import entitlements as having accrued or arising in India." This earlier judgment of the Madras High Court does not appear to have been brought to the notice of the Division Bench which decided the later case. The observations of the Madras High Court in the earlier case, which we have quoted above, clearly suggest that the export activity or export sales were the source of the import entitlements and the export activity t....
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.... [1950] 18 ITR 472 (SC) at page 479, that the place where the source of income is located may not necessarily be the place where the income also accrues, that question is not material in the present case because herein we are concerned only with the question as to the location of the source. The real question is whether the export sales proceeds received from goods manufactured and exported from India constitute a source inside or outside India. To decide the same we have to take a pragmatic and a practical view and not approach the question from a theoretical perspective. 14. Section 9(1)(vii)(b) contemplates a source located outside India. It is difficult to conceptualise the place/situs of the person who make payment for the export sales as the source located outside India from which assessee earned profits. The export contracts obviously are concluded in India and the assessee's products are sent outside India under such contracts. The manufacturing activity is located in India. The source of income is created at the moment when the export contracts are concluded in India. Thereafter, the goods are exported in pursuance of the contract and the export proceeds are sent by....