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2012 (5) TMI 124 - AT - Income TaxPayment to Overseas Commission agent - whether it is simply commission, or it is in the nature of "fees for technical services"? - liability on the assessee to deduct withholding tax – Held that:- The agreement between the assessee and the Non Resident is only for rendering services which cannot be considered as technical services - as there is no PE to the said non - resident in India, the amount does not accrue or arise in India - as there is no need for deducting the amount under section 195, there is no violation of provisions of section 195 and accordingly the same cannot be disallowed under section 40(a)(ia)- if the fee payable is on source of income outside India, the same is not taxable in India - Since there is no evidence that the non-resident has rendered any managerial services to assessee and the agreement indicates only services were provided for agency on commission basis, the findings of AO and CIT(A) are to be rejected - reliance on the CBDT circular 786 dated 7 February 2000 that where the non-resident agent operates outside the country, no part of his income arises in India and no tax is therefore deductible under section 195 - in favour of assessee.
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