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2019 (5) TMI 530 - AT - Income TaxAddition u/s 40(a)(i) - TDS u/s 195 - sale commission paid to the non-residents for the services provided outside India - payment of 'Fee for Technical Services' (FTS) or interest on royalty, - proof of "make available" any technical knowledge, experience, skill, know-how or processes or consists of the development and transfer of technical plan or a technical design - Permanent Establishment in India or not? - India- Belgium & India USA DTAA - HELD THAT:- On application of the settled law to the facts involved in this matter, the irresistible inference that flows is that the commission received by the foreign sales agents is not taxable in India and consequently, the assessee is not under any obligation to deduct TDS, and, therefore, Section 195 has no application to the facts of the case and consequently the disallowance made in this matter cannot be sustained As represented by the assessee that an affidavit showing that neither the assessee nor any of its directors/associated enterprises had any interest in the ownership or management of the agent namely M/s Cee-Jan Beevers and/or his associated enterprises namely M/s Sahasra Europe and the fact that neither he nor his enterprises had Permanent Establishment (PE) in India. This assertion of the assessee was accepted by the learned Assessing Officer in these three years and also was acted upon.M/s Cee-Jan Beevers is a non-resident Indian and resident of Belgium whereas M/s MK group LLC is a resident of USA. In either case the payment of commission would not be 'Fee for Technical Services' (FTS) since such services did not "make available" any technical knowledge, experience, skill, know-how or processes or consists of the development and transfer of technical plan or a technical design. We find that the services rendered by two foreign entities are outside India and in respect of the sales effected by them, and at the same time neither of these entities had any permanent establishment in India nor does the assessee or its directors/associated enterprises had any interest in the ownership or management of these entities more particularly M/s Sahasra Europe. We, therefore, allow the grounds of appeal of the assessee.
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