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2019 (4) TMI 1651 - AT - Income TaxDisallowance u/s 40(a)(ia) - TDS u/s 195 - payment of commission to the foreign agents - CIT (A) has examined the nature of services provided by the foreign agent to the assessee and has come to the conclusion that it is “fees for technical services” - income had accrued/arisen to the foreign agent in India - Specific provision of section 5(2)(b) r.w.s 9(1)(i) - PE in India - no notice by CIT (A) to consider commission as “fees for technical services” - HELD THAT:- Undoubtedly, the powers of the CIT (A) are co-terminus with that of the AO and therefore, the CIT (A) could have examined the facts of the case if the AO has not done so but before doing so, the CIT (A) is required to give a notice to the assessee. In the present case, the CIT (A) has not given any notice to the assessee but has only examined the issue on his own and has given a finding that the payment made by the assessee is “fee for technical services”. Therefore, the finding of the CIT (A) is against the principles of natural justice and has to be set aside on this ground alone. We hold that the business receipts of the foreign residents are not taxable in India since the agents have no PE in India and therefore, the assessee was not required to make TDS u/s 195 of the Act. Therefore, the assessee’s appeals for all the three A.Ys are allowed.
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