TaxTMI 
TaxTMI 
2018 (11) TMI 1051
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....on of TDS on payment of foreign commission. 2. Deleting disallowance merely on the basis that one of the six commission agents not resident vide order 4.7.2013 by Addl Commissioner (International Taxation: Range-3, New Delhi. 3. Ignoring the Board's circular No. 7/2009 dated 22.10.2009 and order of AAR in Appeal No. 983 and 984 of 2010 dated 22.2.2012in the case of SKF Boilers and Driers Pvt. Ltd and other judgements stated in the assessment order of A.0. 4. Ignoring explanation 2 of the Section 195 of the Income Tax Act. 5. The appellant craves leave for reserving the right to add, alter, modify, amend or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 3. Briefly stated facts of the case are that in the assessment completed under section 143(3)/147 of the Income Tax Act, 1961 (in short the 'Act') on 26/03/2014, the Assessing Officer disallowed commission paid of Rs. 1, 87,00,000/-under section 40(a)(i) of the Act for non-deduction of tax at source to following commission agents : "Name of Party Total Amount debited in P & L Account(Rs.) 1. CLAUDIO BAGANTE, VIA BELTRAHE, 7,098,719 ....
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....ssessing Officer. 6. On the contrary, the Ld. Counsel of the assessee submitted that expenditure has been incurred for procuring export orders from foreign countries using services of the foreign agents in foreign countries. No part of the services have been rendered in India. According to him, the foreign agents are not having any permanent establishment in India and, therefore , sum of foreign commission paid to them is not chargeable to tax in India and accordingly the assessee is not liable to deduct tax at source in terms of section 195 of the Act and consequently no disallowance can be made under section 40(a)(i) of the Act in respect of the expenditure on foreign commission. The Ld. Counsel submitted that identical addition was made in assessment year 2010-11 in similar set of the circumstances by the Assessing Officer, which has been deleted by the Tribunal in ITA No. 1522/del/2014. Accordingly, he submitted that issue in dispute is squarely covered in favour of the assessee by the above order of the Tribunal. 7. We have heard the rival submission and perused the relevant metal on record. We find that the Ld. CIT(A) in the instant case has also followed finding ....
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.... commission to M/s Sarl Oren of France (vide orders dt. 04.07.2013 and 09.05.2014) and MIs Linea Moda Di Rita Caravita (vide order dt. 09.05.2014) certifying that such income would be taxable only in France. 8.7. On considering the details filed by the appellant, it is observed that the activities undertaken by the foreign agents precisely related to facilitate the sale of the appellant. The decisions of Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Eon Technology (P) Ltd (supra) and other decisions as discussed by Ld. CIT(A)-XXIV, in appellant's case for AY 2010-11, are directly applicable in appellant's case, which are not being repeated here for the sake of brevity. The services are not technical in nature and these services are rendered by the agents for procurement of export order and they cannot be characterized as 'managerial', 'technical' or 'consultancy services'. Thus, the payment of commission to foreign agents made by the appellant neither comes in the purview of section 9 of the Act as the same is not a fee for technical services nor such payment of commission comes under the category of "sum chargeable t....
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....9 of CBDT will make the commission paid to such non-resident commission agents taxable in India. I am of the considered view that even after the withdrawal of Circular No. 23 of 1969, the position will remain the same i.e., the commission paid to non-resident agents is not liable to tax under the provisions of I T. Act when the services were rendered outside India, services were used outside India, payments were made outside India and there was no permanent establishment or business' connection in India. It cannot be accepted that by virtue of CBDT Circular No. 23/1969, the commission paid to 'nonresident agents become not liable to income-tax in India and on such withdrawal of Circular by the CBDT, such commission paid to non-resident agents become liable to income-tax in India. Irrespective of Circular issued by CBDT, the question of taxability of such commission to income tax has to be decided as per the provisions of section 9(1) of the Act. I am of considered view that the provisions of sec. 9(1) are not applicable to the commission paid to such nonresident agents. Such income (commission) in the hands of non-resident commission agents did not accrue or arise directly ....