TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 230
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....nd on facts of the case in confirming the action of the Ld. A.O. in levying interest of Rs. 61,826/- (Rs. 56,728/- with regard to demand in respect of PKT Associates Inc., USA and Rs. 5,098/- with regard to demand in respect of AST Enterprise Inc, UAE) u/s 201(1A) of the I.T. Act with reference to aforementioned two import payments. 3. Without prejudice to the above grounds, the appellant prays that the Ld. CIT(A) has erred in law and on facts of the case in confirming profit attribution in the hands of the appellant at the rate of 10% of the purchase amount as is determined by the Ld. A.O. on adhoc basis. 4. Without prejudice to the above grounds, the Ld. CIT(A) has erred in law and on facts of the appellant's case in confirming the grossing up of the entire amount for the purpose of section 201(1) & 201(1A) r.w.s. 195 of the Act without appreciating the fact that the appellant's case is not covered within the ambit of section 195A of the I.T. Act. 2. Facts in brief are that the assessee is a firm engaged in trading activity of yellow peas, grains, etc. The A.O. observed that as per the information available on the system, the assessee filed form No.15CA regarding rem....
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....al 3,51,566 61,826 FACTS 1. That appellant is a partnership firm engaged in business of Trading of vanous agro commodities viz yellow peas, grains, forest products. 2. The appellant imported agro commodities from the non-residents during the year under consideration and filed Form 15CA and Form 15CB also. 3. The remittances were made to the non-residents vendors without deduction of TDS u/s. 195 of the Income-tax Act. 4. In order to prove the agents as dependent agent of non-resident, notices u/s. 133(6) were issued to all above agents. 5. Ld AO issued letters and notices for enquiring into the nature. It was submitted ' that since the remittance was made to non-resident, who do not have business connection/establishment in India in terms of sec 9(1)(i) of the Act, thus TDS was not required. 6. Thereafter, assessee was treated as in default in respect of inter-alia above payments; which were confirmed by ld. CIT(A) The specific transactions are discussed as under: 1. Transaction with PKT Associates (Agent Ashapura Commodities):- (a) Assessee purchased yellow peas from PKT Associates, USA. (b) PKT associates does not ....
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...."Business connection". (iv) He does not "Secure Orders" he only forwards the order to PKT Associates, the order is thereafter secured, concluded and executed by PKT Associates. (v) This clause (c) is subject to Proviso, which is an exception to the rule of business connection. Proviso Provided that such business connection shall not include any business activity carried out through a broker, general commission agent or any other agent having an independent status, if such broker, general commission agent or any other agent having an independent status is acting in the ordinary course of his business. In present case: (a) The agent has stated that he is a general commission agent having independent status. His confirmation at pg. 29 of Assessment order is clear. He acts on a principal to principal basis and is not controlled by the non-resident. No evidence to show that he is controlled by the non-resident is brought on record. (b) The agent acts in the ordinary course of business. There is no specific contract between PKT Associates, USA and the agent. No space is provided to PKT Associates. Like they are procuring order for others, they are doing it for PKT Associates. II.....
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.... does not "Secure Orders" he only forwards the order to AST Enterprises, the order is thereafter secured, concluded and executed by AST Enterprises. (v) This clause (c) is subject to Proviso, which is an exception to the rule of business connection. Proviso Provided that such business connection shall not include any business activity carried out through a broker, general commission agent or any other agent having an independent status, if such broker, general commission agent or any other agent having an independent status is acting in the ordinary course of his business. In present case: (a) The agent has stated that he is a general commission agent having independent status. His confirmation at PB 30 is clear. He acts on a principal to principal basis and is not controlled by the non-resident. No evidence to show that he is controlled by the non-resident is brought on record. (b) The agent acts in the ordinary course of business. There is no specific contract between AST Enterprises , UAE and the agent. No space is provided to AST Enterprises. Like they are procuring order for others, they are doing it for AST Enterprises . is further submitted as under: 1. In light of t....
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....h the agent and agent has received orders substantially from the non-resident. He therefore relied on the orders of the authorities below and submitted that no case is made out for interference in the finding of the authorities below. 5. We have heard the rival submissions and perused the materials available on record. The moot issue to be considered is whether under the facts and circumstances of the present case the assessee could be treated as assessee in default. For the sake of clarity, the relevant provision of the Act is reproduced as under: "Section 201: [(1) Where any person, including the principal officer of a company,-- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, be an assessee in default in respect of such tax: [Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on....
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....e made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given.] (4) The provisions of sub-clause (ii) of sub-section (3) of section 153 and of Explanation 1 to section 153 shall, so far as may, apply to the time limit prescribed in sub-section (3).]" 6. From the above provision of law, it is clear that any person who is required to deduct any sum in accordance with the provisions of Act does not deduct or does not pay the whole or part of the amount so deducted fails to pay, such person should be deemed to be assessee in default. Now the question arises whether assessee was required to deduct tax under the Act. As per assessing officer the assessee was required to deduct tax under section 195 of the Act. The contention of the assessee is that under the facts and circumstances, it is not required to deduct tax. It is contended that the agency clause under explanation (2) to section 9(1)(i) of the Act is clearly not attracted as agent does not conclude contract....
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.... to establish that there is a real and intimate connection. The commonness of interest has to be there. It may be by way of management control or financial control or by way of sharing of profits. It may also come into existence in some other manner but there must be something more than of mere transaction or sale and purchase between principal and principal. Reliance is placed on the decision of the Hon'ble A.P. High Court rendered in the case of CIT v. Hindustan Shipyard Ltd. [1977] 109 ITR 158 (A.P.). The reliance also placed on the form No.15CA/15CB issued by the accountant based on the declaration given by the respective parties and their agents. It is further contended that appellant cannot be expected to act on such information, which is imposed to obtain for him. Therefore, the assessee cannot be fastened with the liability of TDS u/s. 195 of the Act and treat the assessee in default u/s. 201 of the Act. 7. We find the Ld. CIT(A) affirmed the action of the A.O. on the ground that as per provisions of the Act, the onus is on the assessee to prove that agents are not securing orders in India mainly or wholly for non-residents. The burden of proving the same always lies o....