TaxTMI 
TaxTMI 
2019 (8) TMI 1126
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.... doing so were not found to be cogent and convincing. Further, the Ld. CIT(A) has also failed to take note of the factum of withdrawal of Board's Circular No.7/2009". 3. On the fact and in the circumstance of the case, the Ld C1T(A) has erred in relying upon the decisions in the case of AC1T, Circle-29(1), New Delhi Vs. Nidhi Exports in 1TA No.626/Del/2012 and Wellspring Universal Vs JC1T (2015) where the facts of the case were found to be different". 4. "The Ld. C1T(A) has failed to appreciate the import of section 9 which lays down that any income of non-resident shall be deemed to accrue on arise in India whose source of income is in India as is in the instant case". 5. "The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal." It is prayed that the order of the Ld. C1T(A)-10, New Delhi being contrary to the facts on record and the settled position of law, be set aside and that of the Assessing Officer be restored." 2. The assessee firm was engaged in business of manufacturing and export of readymade garments. Return declaring total income of Rs. 9,91,97,680/- was e....
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....rom the assessee firm was their profit which ws taxable as per DTAA with India and France and UAE, no part of their income arise in India. The Ld. AR further submitted that the Ld. CIT(A) has rightly relied on the case of SKF Boilers and Driers Pvt. Ltd. and in the case of Rajeev Malhotra. 6. We have heard both the parties and perused all the material available on record. The CIT(A) has held as follows : "4.1 Perusal of assessment order reveals that A.O. made the disallowance in respect of commission paid to foreign agents on which TDS was not deducted by the appellant. For making disallowance, A.O. relied upon the decisions of AAR in the case of SKF Boilers and Driers P. Ltd. and Rajiv Malhotra and provisions of section 5 of the IT Act holding that commission paid to foreign agents is deemed to accrue or arise in India. Reliance has also been placed by the AO on the Board's circular No. 7/2009 by which the earlier circulars i.e. Circular No. 786 dated 07.02.2000 and Circular No. 23 dated 23.07.1969 were withdrawn. Therefore, it was held by the AO that assessee failed to comply with the provisions of section 195 of the Act. Accordingly, commission payment of Rs. 97,41,6....
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....cuted by a person resident in India does not result in establishment of business connection of the non-resident payee. It is further noticed that the ruling of the Hon'ble AAR in SKF Boilers is based on the ruling in the case of Rajiv Malhotra, [(2006) 284 ITR 564 (AAR)]. According to the Ld. Assessing Officer, the said decisions lay down that tax deduction was mandatory on export Commission since Commission was deemed to accrue or arise in India. However, it is observed that the facts of the above ruling are entirely different from those of the appellant. In the case of Rajiv Malhotra, the Commission was payable to non-resident agent for soliciting foreign participants abroad for a trade exhibition to be held in India. Therefore in view of specific provisions of s. 5(2) (b) r/w s. 9(1)(i) as the right to receive the Commission under the terms of the agency agreement had arisen in India, the Commission was held be taxable in India under the provisions of the Act. But in the Appellant's case, the facts are entirely different. In this case, the Appellant has paid foreign Commission to Non- Resident for Commission due on export orders procured by it, i.e. the Non-Resident....
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....he provisions relating to TDS applies only to those sums which are inseparable code and, therefore, the provisions relating to TDS applies only to those sums which are 'chargeable to tax' under the IT Act. It is true that the judgment of Eli Lilly was confined to section 192 of the IT Act. However, there is some similarity between the two. If one looks at section 192 one finds that it imposes statutory obligation on the payer to deduct TAS when he pays any income "chargeable under the head "salaries'". Similarly, section 195 imposes a statutory obligation on any person responsible for paying to a non-resident any sum "chargeable under the provisions of the Act", which expression, as stated above, does not find place in other sections of Chapter XVII. It is in this sense that we hold that the IT Act constitutes one single integral inseparable code. Hence, the provisions relating to TDS applies only to those sums which are chargeable to tax under the IT Act. " 4.1.9 Apart from the above, I also place reliance on the decision of Hon'ble Delhi ITAT, Delhi Bench-E, New Delhi in the case ACIT Circle 29(1), New Delhi Vs. M/s Nidhi Exports in ITA No. 626/Del/2012....