TaxTMI 
TaxTMI 
2016 (8) TMI 1082
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....rtaining to A.Y. 2012-13. 2. In both these appeals, the grievance of the revenue is the same and, therefore, both these appeals were heard together and are being disposed of by this common order for the sake of convenience. The grievance of the revenue relates to the deletion of the addition made by the A.O. on account of commission expenses of Rs. 69,14,768/- in A.Y. 2009-10 and Rs. 84,24,214/- in A.Y. 2012-13. 3. Briefly stated the facts of the case are that assessee runs a proprietary concern and doing business as merchant exporter of Bulk Drugs and Fine Chemicals. 4. During the course of the scrutiny assessment proceedings and on verification of the details, the A.O. found that the assessee has paid commission to following fore....
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....pany. 7. On the basis of the above observations, the A.O. was of the opinion that the export commission was for non-business purposes and accordingly disallowed the same. 8. The A.O. further strengthened his view by invoking the provisions of Section 9 of the Act and came to the conclusion that since the assessee has not deducted at source, the disallowance is also to be made u/s.40(a)(ia) of the Act. 9. Aggrieved by this, the assessee carried the matter before the ld. CIT(A) and reiterated its claim of the payment of commission to the non-resident. 10. After considering the facts and the submissions, the ld. CIT(A) observed as under:- DECISION :- I have considered the facts of the case, material on record as well as the cont....
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....ficient material including confirmation that the seven foreign agents are non-residents in India and they have neither carried out any operation in India nor they have rendered any services in India, no tax is deductible from the payment made to them and hence, the provisions of Section 195 r.w.s. 40(a)(ia) are not applicable. I, therefore, delete this addition of Rs. 69,14,768/- made by the AO. The appellant's contention in Grounds No. 1 and 2 are Allowed. 11. And in A.Y. 2012-13, the ld. CIT(A) observed a under:- 6. Decision: I have carefully considered the facts and law stated by the assessing officer in the assessment order as well as the written submissions made by the A.R. of the appellant during the appellate proceedings....
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....he jurisdictional ITAT Ahmedabad, in case of AIA Engineering Ltd V/s Addl.CIT(ITA No. 580/Ahd/2011) has held that income of a non-resident is deemed to accrue in India only if any part of income is reasonably attributable to operation carried out the non-resident in India and if no operation is carried out in India by the non-resident, there would be no income deemed to accrue or arise in India. Under this factual and legal position, no tax is deductible from the payment made and hence, the provisions of section 40(a)(ia) are not applicable with regard to the captioned payments to non-resident. Since the appellant has filed sufficient material including confirmation that the seven foreign agents are non- residents in India and they have nei....
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....ctively made u/s. 143(3) of the Act. 16. Once, the genuineness of the expenditure has been accepted in earlier years, the payment of commission to the same parities cannot be considered as incurred for non-business purposes. Further, the commission have been paid to the non-resident who do not have any Permanent Establishment in India and, therefore, not liable to tax in India. Therefore, the provisions of Section 195 also do not apply on the facts of the case. 17. Considering the aforementioned facts in totality, we do not find any error or infirmity in the findings of the ld. CIT(A). Both these appeals by the Revenue are accordingly dismissed. Order pronounced in Open Court on 25- 07 - 2016. ============= Document 1 Name of ....