TMI Blog2014 (6) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... me becomes irrelevant for the purpose of allowability of the expenditure under the Income Tax Act. So far as the withdrawal of Circular No. 786 by a subsequent Circular 7/2009 dated 22.10.2009 is concerned, it has been decided in CIT Vs. Angelique International Ltd. [2013 (10) TMI 17 - DELHI HIGH COURT] that the Circular no. 7 of 2009 whereby the Circular No. 789 has been withdrawn did not have retrospective effect - even otherwise at the time of remittance of the amount in question the Circular No. 786 was very much inforce and existence, the assessee cannot be expected to deduct tax at source on the commission paid to the non-resident agent – the order of the CIT(A) is upheld – Decided against Revenue. - ITA No. 5804/Mum/2012 - - - Dated:- 23-5-2014 - Shri Vijay Pal Rao And Shri Narendra Kumar Billaiya,JJ. For the Petitioner : Shri Reepal Trashawala For the Respondent : Shri B. P. K. Panda ORDER Per Vijay Pal Rao, JM This appeal by the revenue is directed against the order dated 15.05.2012 of CIT(A) for the assessment year 2009-10. Revenue has raised following grounds in this appeal:- (i) On the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 9(1), therefore, the Explanation 2 to the said section is not applicable. CIT(A) was of the view that the payment in question is not the fee for technical services or royalty, therefore, the Explanation is not applicable. CIT(A) has also considered the provisions of DTAA between India and UAE and held that when the services are rendered outside India, therefore, as per the DTAA between India and UAE the income arising out of the transaction between assessee and the non resident is not liable to tax in India, therefore, not subjected to provisions of deduction of tax at source and consequently the provisions of section 40(a)(ia) are not applicable. 4. Before us, the Ld DR has submitted that the payment in question is not commission but the real nature of the payment is business income of the non resident. In support of his contention he has referred the guidelines of RBI under which the remittance of commission is permitted only up to 12.5% of the invoice value. The Ld. DR has submitted that in the case in hand the so called commission pad by the assessee is more than 20% and goes up to 22.5%, therefore, it is a clear violation of RBI guidelines to allow the remittanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported the impugned order of CIT(A). 7. We have considered the rival submissions and have carefully gone through the impugned orders of authorities below. As it is manifest from the grounds of appeal raised by the revenue, the grievance of the revenue is limited on the point that the CIT(A) has not appreciated the fact that Circular No. 786 has been withdrawn by the Circular No. 7 of 2009 dated 22.10.2009, therefore, the benefit of earlier Circulars are not applicable to the assessee on the date of order. The Ld. DR has raised a new plea before us regarding the nature of payment of so called commission. It is pertinent to note that neither the AO has disputed the fact of payment of commission by the assessee to the no resident agent nor the CIT(A) has suspected the same. The new plea raised by the Ld. DR involves the question which requires verification and investigation of records and facts for its adjudication and, therefore, in the absence of any finding by the authorities below or any material produced before us in support of a fresh contention, it is not possible to entertain and adjudicate the same. When the AO has not disputed the nature of payment being commission the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, we note that the Hon ble Delhi High Court in the case of CIT Vs. Angelique International Ltd. (supra) had the occasion to consider this issue and held that the Circular no. 7 of 2009 whereby the Circular No. 789 has been withdrawn did not have retrospective effect in para 9 and 10 as under:- 9. First circular in question had been in force for a long time, from 1969. The Board may have withdrawn this circular and other circulars vide Circular No. 7 dated 22nd October, 2009 but the said withdrawal cannot be retrospective. Circular No. 7 of 2009 cannot be classified as explaining or clarifying the earlier circulars issued in 1969 and 2000. This assertion in the assessment order is farfetched and does not merit acceptance. Circular No. 7 does not clarify the earlier circulars but withdraws them. This is obvious and apparent. Circulars in force in the relevant assessment year have to be taken into consideration and should not be ignored. 10. So long as the circulars were in force, it aided in uniform and proper administration and application of the provisions of the Act. Read in this manner, we do not think the respondent-assessee was in default and had failed to deduct at s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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