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2011 (4) TMI 1212 - AT - Income TaxDisallowance u/s 040(a)(ia) - sales commission to non-resident - chargeable to tax or not - The assessee, a public limited company, is engaged in the business of manufacturing of insulators and bushings. The AO noticed that the assessee has made commission payments to the foreign companies. According to the AO, the assessee was liable to deduct the tax at source on payments made to non-resident in view of Circular No. 7 dated October 22, 2009. Since the assessee has not deducted the tax at source, therefore, the commission payable to these companies have not rendered any services to the assessee. No separate addition was made because the entire commission was disallowed under section 040(a)(ia). The Revenue has filed an appeal against the order of the learned CIT (A)-II. HELD THAT:- In the instant case, the sales commission is business profit of the non-resident. In the absence of a permanent establishment, such sales commission was not chargeable and therefore, there was no need for deducting the tax at source. Similarly, the payments in respect of subscription and advertisement cannot be considered to be covered under fees for technical services and therefore, no TDS was required to be deducted. The learned CIT(A) held that the insulator testing is covered under the technical services and the assessee is not in appeal before us. Similarly, the learned CIT (A) has also held that tax was required to be deducted in respect of remittances for technical services on which tax has not been deducted, is to be covered for non-deduction of tax at source. The assessee is not in appeal before us. we hold that the learned CIT (A) was justified in holding that no TDS was to be deducted in respect of remittances related to sales commission. In the result, all the appeals of the Revenue are dismissed.
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