TMI Blog2018 (10) TMI 2004X X X X Extracts X X X X X X X X Extracts X X X X ..... idered opinion that the assessee is not liable to deduct tax under the provisions of section 195 on account of foreign agency commission paid outside India for promotion of export sales outside India. Accordingly, the order of the CIT(A) is set-aside and the grounds raised by the assessee are allowed. - Shri R.S.Syal, Hon ble Vice President And Shri Laliet Kumar, Judicial Member For the Assessee :. Sh. Suresh Gupta, CA For the Respondent : Shri Manoj Kumar Mahar, Sr. DR ORDER PER LALIET KUMAR, JUDICIAL MEMBER : 1. The present appeal is filed by the revenue on the following grounds :- 1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,28,09,361/- made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax in India and thereby u/s 40(a)(ia) of the Act as is clear from the reasons indicated in the foregoing paragraphs. For all the aforesaid reasons discussed hereinabove, the ground of appeal no. 2 is allowed and the addition of Rs. 1,28,09,361/- made by the AO is deleted. 4. Feeling aggrieved by the order of the Ld. CIT(A), the revenue is in appeal before us. On the above mentioned grounds. 5. At the outset, the Ld. AR for the assessee has drawn our attention to the order passed by the Tribunal in the case in ITA No. 5806/Del/2014 for assessment year 2011-12 wherein the Tribunal in identical facts have decided the issue in favour of the assessee and dismiss the appeal of the revenue. 6. Ld. DR, per contra, relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) and the decision in the case of Rajiv Malhotra (supra). We find the Id. CIT(A) while upholding the action of the Assessing Officer held that income arising to the agent on account of export commission very much falls within the ambit of provisions contained in section 5(2)(b) of the I.T. Act as the income has accrued in India when the right to receive the same came into existence. According to him although the non- resident agent has rendered services and procured orders abroad but the right to receive the commission certainly arise in India when the order gets executed by the assessee. According to him, the mere fact that the agent is to render services ITA No. 5603/Del/2014 abroad and the commission is to be remitted to him abroad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in that ITA No.5603/Del/2014 context. The agreement of procuring orders would not involve any managerial services. The agreement did not show the applicability or requirement of any technical expertise as functioning as selling agent, designer or any other technical services. 22. We find the Hon'ble Supreme Court in the case of Toshoku Ltd. (supra) has observed as under :- During the previous year relevant to the assessment year 1962-63, B, a dealer in tobacco in India, purchased tobacco and exported it to Japan and France through non-resident sales agents, a Japanese company and a French business house respectively. Under the terms of the agreement, the Japanese company, which was appointed as exclusive sales agent in Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to s. 9(l)(i) of the I.T. Act, 1961. The commission amounts which were earned by the non-residents for services rendered outside India could not be deemed to be income which had either accrued or arisen in India. A credit balance, without more, only represents a debt and a mere book entry in the debtor's own books does not constitute payment which will source a discharge from the debt. 23. Similar view has been taken by the Hon'ble Madras High Court in the case of Kikani Exports Pvt. Ltd. (supra) and Faizan Shoes Pvt. Ltd. (supra). ITA No.5603/Del/2014 The Hon'ble Delhi High Court in the case of EON Technology P. Ltd. (supra) has also taken similar view where it has been held that non-resident commission agents based outs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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