TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 395
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....he ld. CIT(A) is contrary to law, facts and circumstances of the case. 2.l. The CIT(A) failed to appreciate that the similar disallowance made by the AO for the A.Y.2014-15 in the assessee's own case was upheld by the CIT(A) vide order in ITA No.291/CIT(A)-1/2017-18 dt.30.1l.2017. 2.2. The CIT(A) ought to have appreciated that the relied upon decision in the case of M/ s. Faizan Shoes is not applicable for the instant case in as much as in the relied upon decision, the commission was paid to non-resident commission agent for procuring export orders from overseas buyers @ 2.5% commission, whereas in the instant case 10% commission was paid to M/s.Biggleswade Ltd., Hong Kong and the services rendered was related to promotion of sales,....
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....40(a)(i) of the Act. The Assessing Officer was further of the opinion that while completing the assessment circular issued by CBDT vide No.7 of 2009 dated 22.10.2009 was taken into cognizance and also the department has not accepted the orders of the Tribunal on the issue and further appeal filed before the jurisdictional High Court is pending for adjudication. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee submitted that the Assessing Officer has erred in disallowing export commission payment to non-resident agents for services rendered outside India u/s.40(a)(i) of the Act for non-deduction of tax at source without appreciating the fact that ....
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....edentials of the buyer which was in the nature of managerial/technical/consultancy services and also fit into the definition of royalty and fees for technical services as per Article 12 clause 2 and Article 13 clause 3 of India-Hong Kong DTAA. 6. The learned AR, on the other hand, supporting the order of the learned CIT(A) submitted that the issue is squarely covered in favour of the assessee by the decision of the Chennai Benches of the Tribunal in the case of M/s.Turbo Energy Ltd., a group company of the assessee, where the Tribunal after considering relevant facts had held that even after amendment by the Finance Act, 2010 with effect from 01.04.1976, Explanation to section 9(2) of the Act, there is no provision to tax the payment made ....
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.... no managerial or consultancy services were rendered by the foreign agents. Further, the entire services rendered outside India and the foreign agents do not have any permanent establishment or business connection in India. The Tribunal further held that nature of services rendered by the foreign agents do not fall under the category of fees for technical services which can be taxed under section 9(1)(vii) of the Act. The Tribunal has also taken note of amendment to Explanation to Section 9(2) of the Finance Act, 2010 w.e.f. 01.04.1976 and held that despite the deeming fiction in section 9(1)(vii) of the Act to tax fees for technical services, but the nature of services rendered by foreign agents do not have territorial nexus to tax the sam....
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....e is upheld. 7.6 Even otherwise, Explanation to See. 9(2) of IT Act is amended by Finance Act, 2010 w.e.f. 01.04.1976. The assessment year involved is 2007-08 to 2009-10 and there js no provision to tax the payments made to the services rendered outside India to the foreign agents in the Income Tax ujs.9(1)(vii) prior to the amendment. This view is upheld by the decision of the Hon'ble Supreme Court relied upon by the Ld.AR in the case of Ishikawajima-Harima Heavy Industries Ltd vs. DIT (2007) (288 ITR 408) which clarified that despite the deeming fiction in section 9, for any such income to be taxable in India, there must be sufficient territorial nexus between such income and the territory of India. It further held that for establis....