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2014 (11) TMI 275 - AT - Income TaxAllowbility of the claim u/s. 40(a)(ia) r.w.s. 9(1) - Payment of sales commission made to the selling agents without deduction of TDS – Held that:- The disallowance shall be made in case of any payment made which is chargeable under this Act and is payable outside India or in India to a non resident not being a company or to a foreign company on which tax is deductible at source - the agreement entered into by the assessee with foreign agents revealed that they have been appointed to act as Commission agents outside India in their respective countries -there is nothing on record to suggest that the income is chargeable to tax in India or the payment has been received by the non resident agents in India or by any other person on their behalf - the non-resident agents did not carry out any business operations in India and has acted as selling agents of the assessee outside India - the commission earned by them for services rendered by them outside India cannot be considered as income chargeable to tax in India. The AO has failed to bring any material on record on the basis of which it could be concluded that commission paid to foreign agents is chargeable to tax in India - Unless the income is chargeable to tax in India, then tax is not required to be deducted u/s 195(1) - no definite conclusion can be made that the commission paid to foreign agents is chargeable to tax in India - the foreign concern, namely M/s. Al Hassan Electricals Company, Oman was acting as the selling agent for the assessee and for that the assessee had outside India and no services rendered by it within the taxable territory, the amount payable as commission was not liable to tax and as the income is arising or accruing to a foreign concern in India, therefore, no disallowance u/s. 40(a)(ia) of the Act on the ground that the tax is not deducted at source u/s. 195 of the Act or remittances made to a foreign concern – Decided against revenue.
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