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2014 (9) TMI 268 - AT - Income TaxNon-deduction of TDS on agency / sales commission payments made to non-resident agents – Invocation of section 40(a)(i) r.w. section 195 – Held that:- Following the decision in GE India Technology Centre Private Ltd. Versus Commissioner of Income Tax & Anr. [ 2010 (9) TMI 7 - SUPREME COURT OF INDIA] - The assessee company is engaged in the business of manufacturing an export of leather goods - it is availing the services of certain non-resident agents for procuring export orders for the assessee for which it is paying commission – the non-resident agents have no business connection in India nor they have any permanent establishments in India - They are procuring export orders for the assessee - the non-resident agents are operating outside the country and all the services are rendered abroad only - though the non-residents are rendering services to the assessee (Indian company), these services are rendered totally outside the country. In such a situation the payments (commissions) made to such agents are not liable to be taxed in India - sales commission paid by the assessees to non-residents are not chargeable to tax in India, therefore provisions of section 195 are not applicable - in all the cases assessees paid sales commission to its non-resident agents for the services rendered by them outside India and the sales commission is not chargeable to tax in India so as to deduct TDS on such payments under section 195 of the Act – the order of the CIT(A) is upheld – Decided against Revenue. Restriction of disallowance u/s 14A r.w. Rule 8D – Held that:- CIT(A) has elaborately considered the issue on analyzing balance sheets of the assessee for the year ending 31.03.2008, 31.03.2009 & 31.03.2010 and the investments made by the assessee for the past 11 years i.e. 31.03.2003 to 31.03.2013 held that total interest free own funds of the assessee ranged from 42.95 crores in the financial year 2002-03 to ₹ 50.20 crores in the financial year 2011-12 - Out of these amounts paid up share capital amount was ₹ 1.20 crores and the balance is reserves and surplus from accumulated profits from the years - These are all non-interest bearing own and free funds available with the assessee company and investments in the partnership firm in none of the years starting from financial year 2002-03 to 2012-13 exceeded the amounts of above free funds available with the assessee company – there was no reason to interfere with the findings of the CIT(A) – Decided against Revenue.
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