2024 (2) TMI 1384

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....agent amounting to Rs.1,61,90,101/-. 3. Brief facts are that the assessee is a firm engaged in the business of manufacturing and exporting of embroidered fabrics and allied products. The orders for exports are received through agents outside the territory of India. During the year under consideration, the assessee filed its return of income on 16.10.2016 by declaring a total income of Rs.7,74,27,070/-. Later on, the case of the assessee was selected for scrutiny. The AO completed the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter "the Act") on 22.12.2018 by making an addition of Rs.1,61,90,101/-. Aggrieved, the assessee filed an appeal before the Ld. CIT(A) who was pleased to delete the same by passing the impugned order ....

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....ed that assessee paid commission to those parties, who were the residents of country where the India had entered into Double Taxation Avoidance Agreement (DTAA). The assessee was show-caused as to why the provision of section 195 of the Act should not be made applicable as the parties to whom the commissions were paid were rendering the services in the nature of consultancy, technical/customer relationship services. The assessee filed its reply and stated that none of the parties/agents to whom the assessee has remitted commission payment/paid commission payment had any Permanent Establishment [PE] in India and therefore, it pleaded that they were not liable to tax in India and so deduction of Tax at source was not necessary. The explanatio....

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....port order from foreign customers based on the price agreed by the assessee; and based on the export orders procured by the Agents, assessee fixed percentage of commission to the agent at the FOB value of the invoice and foreign currency after the fully payment has been received from the foreign customers. Thus, from the term of agreement, it was noted that nature of services rendered by non-residents agent was for procuring export order of products of assessee and the payments made by assessee to them are in the nature of commission which was specifically mentioned in the agreement. In the light of the aforesaid facts/agreement between assessee and foreign agents for earlier years i.e. AY. 2010-11 & AY. 2011-12 in assessee's own case, on t....