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2008 (5) TMI 447 - AT - Income TaxTDS u/s 195 - commission payment to the foreign agents - non-residents - Income - Place of accrual - fees for technical services or Royalty - Assessee has entered into agreements with certain non-residents appointing them as their sales agents - HELD THAT:- Following the decision laid down in the case of Sundwiger EMFG & Co. [2003 (2) TMI 35 - ANDHRA PRADESH HIGH COURT]. We held that, Basically, the agreement is for the promotion and sales of the assessee’s products. The services that are mentioned in the agreement and which are to be rendered by the agent are normal services which any agent may have to perform unless there is a specific stipulation in this regard. Similarly, obtaining an LC or advance payment can by no stretch of imagination be considered to be a managerial service as envisaged in section 9(1)(vii) of the Act. It is only one agreement of sales promotion and not a composite agreement as argued by the Ld DR. There is also a fallacious argument made that since the orders are in the name of the assessee, the sales are deemed to have been effected in India. This argument has totally ignored the Sale of Goods Act and if such an argument was allowed to be sustained, then all the clarifications issued by the Board would be nullified and the very concept of export sales would disappear altogether. The Commercial information which the agent in our case is expected to provide to the assessee is not such over which the agent has an exclusive domain. It is merely a market informa-tion which any Tom, Dick and Harry can go into the market and obtain it. The definition given in the DTAA is also in consonance with the definition. It states that royalty means payment of any kind received as a consideration for information concerning industrial, commercial or scientific experience. It simply means that a person who has an exclusive right over a particular information and over which no one else in the world is a privy to it, can assign a right to use such information to the other. There is no such issue in the present case. Thus, the argument of the ld DR with regard to royalty has no basis at all. Similarly, the argument relating to technical services also has no basis. In other words, the Circulars of the Board apply with full force to the facts of the present case and since the payments made to the non-residents are not income chargeable to tax in India, the assessee was not liable to deduct at source under section 195 of the Act. Remittance made through bank, we agree with the view of the CIT(A) that since none of the agreements stipulated the mode of payment nor was there any specific request by the payees about the mode of payment, the decision in the case of Ogale Glass Works Ltd. [1954 (4) TMI 3 - SUPREME COURT], will not apply. Similar issue has been dealt with by the Hyderabad Bench of the Tribunal in the case of Dr. Reddy’s Laboratories Ltd. and the discussion made therein will apply with full force in the present case. Accordingly, we uphold the order of the CIT(A) cancelling the demand. In the result, all the appeals of the department are dismissed.
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