TaxTMI 
TaxTMI 
2026 (8) TMI 1830
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....levant to Assessment Year 2012-13. 2. The assessee has raised the following grounds of appeal: 1. The learned NATIONAL FACELESS APPEAL CENTRE (NFAC) has grievously erred both in law and on facts in dismissing the appeal of the appellant and upholding the addition/disallowance of Rs. 9,66,471/- made by Ld AO by wrongly invoking section 40(a)(i) of the Income tax Act, 1961. There being no liability to make TDS on payment of sales commission to foreign agent rendering service of sales outside India, the disallowance ought to be deleted, it be deleted now. 2. The LD NFAC further erred in law and on facts in not appreciating that the payee foreign agent had rendered services outside India for effecting sales as per evidences....
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....nd order so passed be cancelled. 6. The LD NFAC ought to have allowed the appeal in toto 7. The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing. 3. Brief facts of the case are that in the original order passed u/s.143(3) AO made addition in respect of non-deduction of TDS from the commission payments made outside India the assessee however had failed to discharge the obligation. Therefore, the expenditure claimed under the head Commission expenses paid to non-residents is disallowed and added back to income u/s 40(a)(i), of Income tax Act. Thus, an amount of Rs. 9,66.,471/ on which TDS has not been deducted, is disallowed and added in the hands of the assessee The CIT(A) ....
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....f-assessment of chargeability Section 5(2)(b) provides that income of a non-resident includes income which accrues or arises or is deemed to accrue or arise in India. As per section 9(1)(i), income arising directly or indirectly through or from any "business connection" in India is deemed to accrue or arise in India. In the present case, though services were rendered outside India, the commission became due and payable only upon execution of export orders in India. Hence, the source of income is situated in India. The right to receive commission is directly linked to the appellant's business operations in India. Accordingly, the income is deemed to accrue or arise in India Support for this view is found in the rulings of Rajiv Malhotra ....
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....ts, invoices and other supporting documents and submitted that the agents had no permanent establishment or business operations in India. 6.1 The Hon'ble Supreme Court in CIT v. Toshoku Ltd., 125 ITR 525 (SC), held that commission earned by non-resident agents for services rendered outside India does not accrue or arise in India merely because the orders were obtained for an Indian assessee. Further, in GE India Technology Centre Pvt. Ltd. v. CIT, 327 ITR 456 (SC), it was held that tax is deductible under section 195 only where the payment is chargeable to tax in India. 6.2 In the present case, the Revenue has not brought any material on record to establish that the non-resident agents rendered services in India or had any permanent e....