TaxTMI 
TaxTMI 
2021 (10) TMI 1138
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....lved, without properly considering the material on record and without affording appropriate specific lawful opportunity. Moreover, they are based on suspicion, conjectures and surmises without any contrary evidence. As such the disallowance of commission made by Ld. AO and by LD CIT(A) is unwarranted and not capable of being sustained. 3. That the disallowance of the said commission by the Ld. AO and by Ld. CIT(A) is against the consistency principle. Similarly disallowance on similar facts made in AY 2010-11 was deleted by Ld. CIT(A). Moreover, the said disallowance is contrary to binding judgments of the Hon'ble Delhi High Court in CIT Vs. Grup Ism (P) Ltd., [2015] 57 taxmann.com 450 (Delhi) and DIT (International Taxation-II) Vs. Panalfa Autoelektrik Ltd., [2014] 49 taxmann.com 412 (Delhi). 4. That the disallowance of commission as made by Ld. CIT(A) for impugned insufficient evidence of agreement for the purpose of ascertaining nature of services rendered by Payee is completely erroneous and without any specific opportunity in this matter to the Appellant or without any evidence to the contrary and for new reasons than the reasons adopted by the Ld. AO. The disallowance....
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....appointed by the assessee in earlier years for assistance in procuring export orders for the assessee in France. In the year under consideration also, the assessee appointed M/s. 'Ace' as its agent for procuring export orders in France. The assessee debited a sum of Rs. 1,16,99,172/- as commission paid on export sales. No tax was deducted at source by the assessee on said payment. According to Assessing Officer, the assessee was required to deduct tax at source on the said payment in accordance with provision of section 195 of the Act and due to failure on the part of the assessee, he asked as why provision of section 40(a)(i) might not be invoked, and the payment to 'Ace' might not be disallowed. It was submitted by the assessee, that commission was paid to foreign Payee, who is a tax resident of France and no TDS was attracted under section 195 of the Act, as commission paid to the foreign payee is business income as per Article 7 of the DTAA with France. Since the foreign payee had no permanent establishment in India, therefore, no income is chargeable to tax in India. Accordingly, the assessee was not required to deduct tax at source under section 195 of the Act....
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....even under the domestic law, the income of the assesses firm is taxable only to the extent the work has been carried out in India. It is thus unambiguous that the judgment of Hon'ble Bombay High Court rests on the legal premises that, under section 9(1)(vii), "services, which are source of income sought to be taxed in India, must be (i) utilized in India; and (ii) rendered in India" and the conceptual premises that "territorial nexus for the purpose of determining the tax liability is an internationally accepted principle". These legal premises, however, do no longer hold good In view of retrospective amendment w.e.f 1st June 1976 in section 9 brought out by the Finance Act, 2010. Under the amended Explanation to Section 9(1), as it exists on the statute now, it is specifically stated that the income the non-resident shall be deemed to accrue or arise in India under clause (v) or cause (vi) or clause (vii) of section 9(1), and shall be included in his total income, whether or not (a) the nonresident has a residence or place of business or business connection in India; or (b) the non-resident has rendered services in India. It is thus no longer necessary that in order to att....
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....export commission and consequently, in default under section 40(a)(i) of the Act and held the assessee liable for disallowance of such export commission of Rs. 1,16,99,172/- paid by the assessee to M/s. Ace, France. The Ld. CIT(A) also upheld the finding of the Assessing Officer. Aggrieved, the assessee is before the Tribunal raising the grounds as reproduced above. 3.3. Before us, the Learned Counsel of the assessee relied on the order of the Tribunal in the case of the assessee for assessment year 2010-11 and submitted that commission paid to same party on export sales has been held to be income not chargeable to tax in the hands of said agent in India and, therefore, there was no requirement of deducting TDS at source. Hence, the disallowance under section 40(a)(i) of the Act deleted by the Learned CIT(A) was upheld by the Tribunal in AY 2010-11. According to the assessee, there is no change in facts and circumstances as were in assessment year 2010-11 and therefore case of the assessee is fully covered by the decision of the Tribunal (supra). On the contrary, the Learned DR submitted that separate agreement has been made for the year under consideration and in view of the Expl....
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....by the payee outside India through normal banking channels. Section 5(2) states that total income of a person, who is a nonresident, includes income from all sources which (a) is received or deemed to be received in India; (b) accrues or arises in India; or (c) is deemed to accrue or arise in India. In the present case, the commission income paid to the foreign agent neither accrued in India nor deemed to be accrued in India as per deeming provisions of section 9 and nor the same was received nor deemed to be received in India. Thus, there is no need to interfere with the findings of the CIT(A). The Appeal of the Revenue is dismissed. 3.5. Further, the non-resident can invoke DTAA between India and France, if provisions of the same are more beneficial to the non-resident. We find that Hon'ble Delhi High Court in the case of Steria India Ltd. v. DCIT, 255 Taxman 110 (Delhi) (HC) held that Most Favoured Nation (MFN) clause of the protocol will form an integral part of India France DTAA and it will be automatically applicable without any further notification. In view of Most Favoured Nation (MFN) clause, the beneficial provision of Convention between India and other OECD country,....