TaxTMI 
TaxTMI 
2020 (5) TMI 230
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....his appeal. 2. The Ld. CIT(A) has erred in law and 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 informati....
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....0 - by agent, 15CA/15CB - PB 39-43 AO pg. 34 (bottom) - by seller AO pg. 38 - Reply by agent. 5,30,271 53,003 88,378 36,412 5098 Total 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 co....
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....he words "main client" loosely and that does not have repercations u/s. 9 of the Income-tax Act, 1961. The agent itself has stated that he is just a commission agent. Ld AO has not provided that there is a "real and intimate relation". Merely picking and choosing words from letter would not demonstrate a "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....
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....at he does not maintain merchandise. Fact not disputed by ld lower authorities. (c) Habitually secures orders in India, mainly or wholly for the non-resident or for that non-resident and other non-residents controlling, controlled by, or subject to the same common control, as that non-resident (i) Agent clearly stated that he deals for other parties also. PB 30. (iii) He 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-resid....
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....sed on the declarations given by the respective parties and their agents. The appellant cannot be expected to act on such information which is impossible to obtain for him. The appellant therefore cannot be foisted with the liability of TDS u/s. 195 and treated as assessee in default u/s. 201. 4. Ld. D.R. opposed these submissions and submitted that it has been categorically brought on record that the transaction has been carried out through 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 th....
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....an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident. (2) Where the tax has not been paid as aforesaid after it is deducted, [the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A)] shall be a charge upon all the assets of the person, or the company, as the case may be referred to in sub-section (1). (3) No order shall be 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 ded....
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....the transaction with AST Enterprises, the similar submissions have been made as were in the case of PKT Associates. He further contended that in the light of circular No.23 of 1969 dated 23.7.1969, the specific instances were quoted regarding applicability of provisions of section 9 of the Act. He contended that appellant had prima facie established that the non-resident had no business connection in India. The onus was on the revenue to establish that the non- resident had a business connection in India. No enquiry was conducted from the non residents. No evidence 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 re....