TMI Blog2022 (8) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided in favour of assessee. - ITA No. 1692/Ahd/2019 & C.O. No. 26/Ahd/2022 - - - Dated:- 3-8-2022 - Ms. Annapurna Gupta , Accountant Member And And Shri T. R. Senthil Kumar , Judicial Member Appellant by : Shri V. K. Singh , Sr. D. R. Respondent by : Shri Karan Shah , A. R. ORDER Per T. R. Senthil Kumar , Judicial Member The present appeal has been filed by the Revenue against the order dated 13.08.2019 passed by the Commissioner of Income Tax (Appeals)-2, Ahmedabad, as against the Assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the Assessment Year (A.Y) 2016-17. The assessee has filed the Cross Objection. 2. The brief facts of the case is that the assessee company is engaged in the business of wholesale trading of chemicals of various types/kinds. The assessee has also engaged in the business of export of chemicals as well as seas transactions. For the Assessment Year, 2016-17, the assessee filed its Return of income declaring income of Rs. 76,47,740/- and book profit u/s. 115JB of Rs. 71,37,243/-. The case was selected for scrutiny assessment and the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses under section 40(i) of the Act, without properly appreciating the facts of the case and material on record, 2. Without prejudice to the above, the learned CIT(A) has erred, in law and on facts in deleting-the commission to foreign agents amounting to Rs. 2,14,03,441/- without appreciating the fact that the assessee was unable to produce evidences to prove the genuineness of such payments and also the factum of actual rendering of services by such recipients. 5. The Ld. Senior D.R. Mr. V.K. Singh appearing for the Revenue fairly conceded this matter has been covered in assessee's own case for the Assessment Year 2013-14 in ITA No. 2570/Ahd/2016 and C.O. No. 207/Ahd/2016 wherein Co-ordinate Bench of this Tribunal dismissed the Revenue's appeal. Respectfully following the above judgment, the present appeal also liable to be dismissed. 5.1. The ld. Counsel for the assessee submitted that the commission paid to the same parties as that of the earlier years, there is no change in payment of commission made to the nonresidents. Therefore the order passed in the assessment year 2013-14 will be squarely applicable for the present assessment year also. 6. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra (supra) which, in our considered view, does not take into account the impact of Explanation 1 to Section 9(1)(i) properly. That was a case in which the nonresident commission agent worked for procuring participation by other nonresident entities in a food and wine show in India, and the claim of the assessee was that since the agent has not carried out any business operations in India, the commission agent was not chargeable to tax in India, and, accordingly, the assessee had no obligation to deduct tax at source from such commission payments to the non-resident agent. On these facts, the Authority for Advance Ruling, inter alia, opined that no doubt the agent renders services abroad and pursues and solicits exhibitors there in the territory allotted to him, but the right to receive the commission arises in India only when exhibitor participates in the India International Food Wine Show (to be held in India), and makes full and final payment to the applicant in India and that the commission income would, therefore, be taxable under section 5(2)(b) read with section 9(1)(i) of the Act . The Authority for Advance Ruling also held that the fact that the agent renders services ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettled in law that when the payment made to a nonresident does not have an element of income, tax deduction source requirements under section 195(2) do not come into play at all. Hon'ble Supreme Court, in the case of GE India Technology Centre (P.) Ltd. v. CIT [2010] 327 ITR 456/193 Taxman 234/7 taxmann.com 18, has inter alia observed as follows: In our view, Section 195(2) is based on the principle of proportionality . The said sub-Section gets attracted only in cases where the payment made is a composite payment in which a certain proportion of payment has an. element of income chargeable to tax in India. It is in this context that the Supreme Court stated, If no such application is filed, income-tax on such sum is to be deducted and it is the statutory obligation of the person responsible for paying such 'sum' to deduct tax thereon before making payment. He has to discharge the obligation to TDS . If one reads the observation of the Supreme Court, the words such sum clearly indicate that the observation refers to a case of composite payment where the payer has a doubt regarding the inclusion of an amount in such payment which is exigible to tax in India. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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