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2014 (4) TMI 1159 - AT - Income TaxTDS u/s 195 - non-deduction of TDS on commission payment to non-resident - allowable business expenditure - P.E. in India - Held that:- The business of the assessee is mainly of export of textile garments. The assessee has made payment to Shri Bharat Goel who is a non-resident and who does not own any permanent establishment or administrative office in India. Similarly, assessee is also not maintaining any permanent establishment in foreign countries. It is in these circumstances the assessee is making payment of commission to non-resident at specified rate. The recipient of the commission is also not a related party to the assessee. All these findings of facts have been recorded by Ld. CIT(A) and are not disputed by the Revenue as there is no material on record to suggest that these findings of Ld. CIT(A) are either incorrect or false. It is also the findings recorded by Ld. CIT(A) that similar payments were made by the assessee in earlier years to Shri Bharat Goel and have been accepted as allowable expenditure by the Revenue. This fact is clear from the assessment order for A.Y 2006-07 which is passed under the provisions of section 143(3) of the Act and copy is placed on the paper book. It is also a matter of fact that while making the disallowance the AO did not bring any material on record to suggest that the payment made by the assessee to Shri Bharat Goel was for any purpose other than business of the assessee. Thus it is difficult to uphold the findings of the A.O that the payments were not made by the assessee for business expediency. In absence of any contrary material and in view of the fact that similar payments have been accepted by the Revenue in earlier years as business expenditure, we are of the opinion that Ld. CIT(A) did not commit any error in holding that such amount was allowable as business expenditure and, therefore, could not be disallowed under section 37 of the Act. Coming to the alternative claim of the AO that on account of nondeduction of tax the amount was disallowable. Here the case of AO is mainly based on withdrawal of earlier circulars and this issue has been discussed in details in above part of this order. The aforementioned decision of Hon’ble Delhi High Court in the case of CIT vs. Angelique International Ltd (2013 (10) TMI 17 - DELHI HIGH COURT) and CIT vs. Model Exims (2013 (9) TMI 742 - ALLAHABAD HIGH COURT) it has been made clear that withdrawal of earlier circular by the CBDT vide circular No.7 of 2009 dated 22/10/2009 will not operate prior to that date i.e. 22/10/2009. Both the financial years under consideration are prior to 22/10/2009. Therefore, we are of the opinion that there is no error in the order passed by Ld. CIT(A) vide which it has been held that even on the basis of Circular No.7 dated 22/10/2009 disallowance could not be made. - Decided in favour of assessee
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