2017 (5) TMI 413

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.... 5.67 crores. 2. The assessee has filed additional ground of appeal, vide its application dated, 04/04/2014, stating that issue raised by it is of legal nature. During the course of hearing before us, the Authorised Representative (AR) reiterated the submissions that are part of the application five for admission of additional ground. The Departmental Representative (DR) left the issue to the discretion of the bench. We find that the assessee has raised ground about disallowance to be made u/s. 14A read with rule 8D of the Income Tax Rules, 1962 (Rules), that the issue raised is legal in nature. Therefore, we admit the additional ground pertaining to disallowance u/s. 14 A of the Act. 3. First ground of appeal is about tax to be deducted ....

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....ave any office/branch outside India, that the export sales were made through the contacts of the agents, that the payment was made outside India for the purpose of earning income from sources that were located outside India. It relied upon the circular No.s. 23, dated 23/07/1969 and 786, dated 07/02/2000, issued by the CBDT and stated the liability to deduct tax at source would arise only if the payment of commission to the nonresident agent would be chargeable to tax in India. The assessee relied upon certain case laws. After considering the submission of the assessee and the assessment order, the F AA held that there was no written agreement between the assessee and the agents, that payments were made on account of commission on export, t....

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....to the agents was not taxable in India, that the payment was made outside India, that the services were rendered outside India and the person receiving the payment was not in India. He referred to the case of the Tribunal (ITA/523/Mumbai/2013, dated 25/05/2016) delivered in assessee's own case for the earlier AY. The DR relied upon the orders of the AO and the F AA. 6. We have heard the rival submissions and perused the material before us. We find that assessee had made payment of Rs. 3.6 lakhs to the agents, that the AO had made a disallowance of said amount u/s. 40(a)(i) of the Act, that the FAA reduced the disallowance. There is no doubt that the persons receiving the commission incomes were located outside India and they had no permane....