TaxTMI 
TaxTMI 
2024 (1) TMI 1075
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....allowance was made in all the years impugned before us in identical facts and circumstances. Therefore, it was pleaded that all the appeals be heard together. We accordingly heard the appeals together and they have been disposed off by this common consolidated order for the sake of convenience. 3. The facts relating to all the years involved before us are being mentioned and dealt with together. 4. The background of the case is that the assessee is engaged in the business of manufacturing and export of textile fabrics/fibre, yarn and other items. The assessee made payment of commission to non-residents in all the years impugned before us, without deducting any TDS on the same. The amounts so paid in each year is - Asstt. Year Amount (Rs.) 2012-13 Rs. 1,73,87,137/- 2013-14 Rs,. 2,55,67,592/- 2014-15 Rs. 5,98,74,596/- 2017-18 Rs. 5,93,23,704/- 5. The AO and the CIT(A)held that the impugned amount of commission paid to foreign agents was liable to TDS and on account of failure of the assessee to do so, all the above amounts of commission paid by the assessee was disallowed in terms of provisions of section 40(a)(ia) of the Act. 6. Aggrieved....
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.....7 The assessee has also not explained the specific details/specifications of the material exported through each agent and the evidence to the fact that what was the procedure to execute the Agreements executed between the Company and the foreign commission agents. Further, the document showing that the commission paid to foreign agents have been charged to tax in their respective countries has not been provided closing the argument that income is not received or deemed to be received in India as well as accrues or arises or is deemed to accrue or arise in India. 6.8 Specifically, the following were not produced by the appellant during the course of the appellate proceedings. (a) Nature of service rendered by the subsidiary company abroad. (b) Copy of agreement/work order with description of service rendered. (c) Details of bank advice and e-mail correspondence in connection with the service provided. (d) DTAA between India and the country where material was exported (e) Copy of income tax return of the relevant period of foreign agents to clarify the issue 6.9 Section 195 of the IT Act requires any person to deduct IDS....
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....dents for services rendered outside India so as to take it outside the purview of section 40(a)(ia) of the Act. 10. During the course of hearing before us, the ld.counsel for the assessee drew our attention to the decision of Hon'ble Apex Court in the case of CIT Vs. Toshoku Lld., (1980) 125 ITR 525 (SC) wherein the Hon'ble Apex Court had settled the proposition of law with regard to the issue of chargeability to tax of commission paid to foreign agents ,in which situation they would be treated as not accrued or arising in India. Our attention was drawn to page no.7 of the order pointing therefrom that Hon'ble Apex Court had categorically held that where the services on account of which the commission was earned, were not rendered in India, the commission cannot be deemed to have accrued or arisen in India. The relevant portion of the judgment of the Hon'ble Apex Court is reproduced as under: "The second aspect of the same question is whether the commission amounts credited in the books of the statutory agent can be treated as incomes accrued, arisen, or deemed to have accrued or arisen in India to the non-resident assessees during the relevant year. This takes us to s.....
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....on of law. But as per the ld.CIT(A) the assessee has not demonstrated rendering of services by the commission-agents outside India. In fact, as per the ld.CIT(A) the assessee has not submitted any evidence to demonstrate the rendering of any services of the agents. 12. Before us, the ld.counsel for the assessee pointed out that this finding of the ld.CIT(A) is incorrect on facts. He contended that during appellate proceedings, the assessee had submitted all the documentary evidences to prove that the services by these foreign agents were all rendered outside India. He contended that copy of the agreement with the commission agents were filed to the ld.CIT(A) pointing out there from that their scope of work was to procure sale orders for the assessee from the territories outside India. He further pointed out that copies of invoices of sale bills made in the territories of these agents on which commission paid to them was also filed to the ld.CIT(A). He further pointed out that even a certificate from a Chartered Accountant was filed to the ld.CIT(A) in form No.15CB, certifying the fact that the commission paid to the foreign agents was for services rendered outside India. In this....
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....iv. bills, debit notes raised by the overseas agent on the appellant, form No 15 CB as per Rule 37 BB of the IT Rules. 6. Appellant has further stated that these all information was lying with the Marketing department of the appellant, and hence could not be submitted during the course of assessment proceedings as the Finance and Accounts Department of appellant was not aware about such documents lying in the Marketing Department of the company. This statement of appellant is flimsy. All the records and documents which the appellant is now putting on record were lying with the appellant itself as stated. Therefore, it was nothing but mere abstinence of not placing these entire set of documents at the time of assessment proceedings. Further, placing additional evidences is not going to make any material difference when the nature of addition in the assessment order u/s 143(3) vide dated 05.03.2015 is entirely on the ground that TDS has not being deducted at the time of payments to foreign commission agents. 7. Besides, the at page no 8, the additional evidence produced by the appellant is actually a copy of agreement between the appellant and one of the foreign com....