TaxTMI 
TaxTMI 
2022 (8) TMI 1212
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....9;the Act') relating to the Assessment Year (A.Y) 2016-17. The assessee has filed the Cross Objection. 2. The brief facts of the case is that the assessee company is engaged in the business of wholesale trading of chemicals of various types/kinds. The assessee has also engaged in the business of export of chemicals as well as seas transactions. For the Assessment Year, 2016-17, the assessee filed its Return of income declaring income of Rs. 76,47,740/- and book profit u/s. 115JB of Rs. 71,37,243/-. The case was selected for scrutiny assessment and the Assessing Officer completed the assessment disallowing the expenditure claimed under the head "Commission expenses" amounting to Rs. 2,14,03,441/- paid to non-residents and added back to ....
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....ppeal filed by the Revenue and allowed the commission paid to the parties outside India. Further, the Hon'ble Gujarat High Court in the case of Pr. CIT-2 vs. Komal Amin Exports Pvt. Ltd. in Tax Appeal No. 1397 of 2008 decided on 18.02.2019 on similar facts and deleted the additions on the commission paid by the assessee. 3.2. In view of the above, the disallowance made by the Assessing Officer of Rs. 2,14,03,441 was deleted by Ld. CIT(A). 4. Aggrieved against the same, the Revenue is in appeal before us and raising the following Grounds of Appeal: 1. The learned CIT(A) has erred, in law and on facts, in deleting the disallowance of Rs. 2,14,03,441/- made on account of disallowance of commission expenses under section 40(i) of the Ac....
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....perused the material on record and duly considered the facts of the case as also the applicable legal position. 5. The basic contention of the Assessing Officer is that in view of the scope of deeming fiction under section 9(1)(i), which inter alia holds that any income 'arising directly or indirectly from any business connection in India' will be deemed to accrue or arise in India, read with the scope of charging Section 5(2), which enables taxability of a non-resident in respect of "income accruing or arising or deemed to accrue or arise, in India, income arising in the hands of the non-resident commission agent is taxable in India. What he overlooks, however, is the impact of Explanation 1 to Section 9 (1)(i) which states that ....
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....ng participation by other nonresident entities in a food and wine show in India, and the claim of the assessee was that since the agent has not carried out any business operations in India, the commission agent was not chargeable to tax in India, and, accordingly, the assessee had no obligation to deduct tax at source from such commission payments to the non-resident agent. On these facts, the Authority for Advance Ruling, inter alia, opined that "no doubt the agent renders services abroad and pursues and solicits exhibitors there in the territory allotted to him, but the right to receive the commission arises in India only when exhibitor participates in the India International Food & Wine Show (to be held in India), and makes full and fina....
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....ssion agent can be brought to tax in India. In this view of the matter, views expressed by the Hon'ble AAR, which do not fetter our independent opinion anyway in view of its limited binding force under s. 245S of the Act, do not impress us, and we decline to be guided by the same. The stand of the revenue, however, is that these rulings, being from such a high quasi-judicial forum, even if not binding, cannot simply be brushed aside either, and that these rulings at least have persuasive value, We have no quarrel with this proposition. We have, with utmost care and deepest respect, perused the above rulings rendered by the Hon'ble Authority for Advance Ruling. With greatest respect, but without slightest hesitation, we humbly come t....
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....regarding the inclusion of an amount in such payment which is exigible to tax in India. In our view, the above observations of this Court in Transmission Corporation case (supra) which is put in italics has been completely, with respect, misunderstood by the Karnataka High Court to mean that it is not open for the payer to contend that if the amount paid by him to the nonresident is not at all "chargeable to tax in India", then no TDS is required to be deducted from such payment. This interpretation of the High Court completely loses sight of the plain words of Section 195(1) which in clear terms lays down that tax at source is deductible only from "sums charge able" under the provisions of the I.T. Act, i.e., chargeable under Sections 4, 5....