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2019 (1) TMI 1453 - AT - Income TaxTDS u/s 195 - commission paid to the Foreign Agents u/s 40(a)(ia) - fees for technical services - non-resident rendering services outside India - PE in India - Held that:- Since the non-resident agents do not have any permanent establishment in India no part of the commission income of those agents can be said to have been accrued or arise in India. Further that the commission payments to non-resident agents also cannot be as regarded fees for technical services as defined in explanation 2 of Section 9(vii) as the commission payment is not for rendering any managerial, technical or consultancy services. It is well settled principle of law flowing from the judgment passed in the case of CIT vs. Toshoku Ltd., [1980 (8) TMI 2 - SUPREME COURT] that the non-resident since rendering services outside India, the commission earned by such non-resident for acting as an agent for Indian exporter would not accrue in India. In the case in hand the foreign agents are not residents of India and thus squarely covered by the said judgment passed by the Hon’ble Apex Court. Further that similar commission paid in earlier years by the assessee to the foreign agents in the similar set of facts and circumstances no disallowance made by the authorities below and therefore disallowance made by the Learned AO is not justified. In fact the order impugned clarified each and every aspect of the matter as discussed above does not call for any interference and therefore in the absence of any infirmity we confirm the same. Thus, revenue’s ground of appeal is dismissed. Disallowance made u/s 14A - Held that:- no direct or indirect expenditure has been incurred by the firm in respect of investment in capital with partnership firm. In the absence of any expenditure incurred and debited to profit and loss account of the company in relation to investment in capital in partnership firm application of Rule 8D(iii) is not permissible and therefore no disallowance of expenditure is required to be made. The investment in partnership was made out of the own funds as it is clearly evident from the record before us; no interest bearing borrowed fund were used for making these investment. The judgment relied upon by the Learned AR in this respect passed by the Jurisdictional High Court in the case of Corrtech Energy Pvt. Ltd.[2014 (3) TMI 856 - GUJARAT HIGH COURT] which has held that in a case where there is no income which is not chargeable to tax, provision of Section 14A of the Act will not be applied is rightly applied to the instant case. - decided in favour of assessee
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