2019 (2) TMI 230

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....of the issue is that the Ld.CIT(A) has erred in deleting the addition made by the Ld.AO amounting to Rs. 1,14,43,418/- invoking the provisions of Section 40(a)(ia) of the Act towards non-deduction of tax at source with respect to expenditure incurred on overseas commission. 3. The brief facts of the case are that the assessee is a firm engaged in the business of manufacturing and exporting of garments, filed its return of income for the assessment year 2013- 14 on 29.09.2013 admitting total income of Rs. 26,87,750/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny under CASS and notice U/s.143(2) of the Act was issued on 05.09.2014. Finally assessment order was passed U/s.143(3) ....

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....ad and therefore the facts are identical to the decision rendered by the Hon'ble Jurisdictional Madras High Court in the case CIT vs. Faizan Shoes cited supra wherein it was held as follows:- "9. The Explanation to Section 9(2) of the Act was substituted by the Finance Act, 2010 with retrospective effect from 1.6.1976. The above said explanation would come into play only if the said amount paid would fall under the headings: (i) income by way of interest as set out in Section9(1)(v) of the Act; or (ii) income by way of royalty as set out in Section9(1)(vi) of the Act; or (iii) income by way of fees for technical services as set out in Section 9(1)(vii) of the Act. 10. While dealing with Section 9(1) of the Act, the Supreme Court....

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....through and from business connection in India shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. If no operations of business are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any business connection in India cannot be deemed to accrue or arise in India (See CIT v. R. D. Aggarwal and Co. [1965] 56 ITR 20 (SC) and Carborandum Co. v. CIT [1977] 108 ITR 335 (SC) which are decided on the basis of s. 42 of the Indian I.T. Act, 1922, which corresponds to s. 9(1)(i) of the Act). 9. In the instant case, the non-resident assessees did not carry on any business operations in the taxable territories.....