TMI Blog2018 (2) TMI 2037X X X X Extracts X X X X X X X X Extracts X X X X ..... s.4 did not accrue or arise in India in the hands of the non-residents having regard to section 5 r.w.s.9(1) of the Act. Accordingly, where the income in the hands of non-residents in question i.e. foreign remittances made by the assessee was not taxable in India, the remittance was not susceptible to withholding of taxes (TDS) under s.195 of the Act. In the absence of abligation cast upon the assessee to deduct TDS under s.195, section 40(a)(i) has no application in the instant case for disallowance of the expenses. The CIT(A) has rightly concluded the issue in favour of assessee - I.T.A. No. 2265/Ahd/2015 - - - Dated:- 23-2-2018 - SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny justification in the plea of the assessee for nondeduction as contemplated under s.195 of the Act. Consequently, provisions of section 40(a)(i) of the Act was invoked to deny the deductions claimed towards expenditure incurred where TDS was not deducted on remittances made. 3. Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) after examining the facts in detail, reversed the action of the AO and granted relief towards such disallowance. It was observed by the CIT(A) that expenses have been incurred in foreign currency and the same have been remitted to non-residents outside India for the services rendered outside India. The relevant operative paras of the order of the CIT(A) are reproduced hereunder. 5. I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean International Logistic Co. Ltd. and ABS Co. Ltd. on account of freight charges, cargo handling services, inspection and logistic charges. The fact is that the expenditures of ₹ 33,65,658/- were incurred by the appellant in foreign currency and the same were remitted to the non-residents on account of freight charges and cargo handling services, inspection and logistic charges. These non-residents i.e. Shenzhen Uni-Grandocean International Logistic Co. Ltd. and ABS Co. Ltd. had rendered their services outside India and they had no permanent establishment in India or any agent in India. Thus, it cannot be said that the income of ₹ 33,65,658/- were accrued to or arisen to these two parties in India. Since the income in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of the Act to such remittances to non-residents and accordingly deleted consequential disallowance made under s.40(a)(i) of the Act. 5. Aggrieved, the Revenue preferred appeal before the Tribunal. 6. We have heard the rival submissions. With the assistance of the Ld.DR for the revenue and Ld.AR for the assessee, we observe that the CIT(A) has rightly concluded that the freight charges and cargo handling charges paid by the assessee in foreign currency to non-residents for services rendered outside India is not susceptible to provisions of section 195 of the Act. It is an admitted position that the recipients did not have any permanent establishment in India or any agent in India. Consequently, the chargeable income thereof under s.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
