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2011 (1) TMI 1332 - AT - Income TaxTDS u/s 195 - Commission paid to the foreign agent for procurement of Export Order - non-deduction of TDS - effect of withdrawal of circulars - HELD THAT:- Reliance was placed on the decision of Dy.CIT vs. M/s.Siemens Aktiengeselschaft [2009 (12) TMI 952 - ITAT, MUMBAI] as held while deciding a similar issue, the Tribunal held that it is axiomatic that a circular in operation through the relevant assessment year cannot be held to be inoperational simply by reason of the fact that it has been withdrawn in the year 2009 - issuance of circular no.7 of 2009 withdrawing the circular no.23 of 1969, 163 of 1975 and 786 of 2000 will be operative only from 22.10.2009 and not prior to that date. Thus, the withdrawal of earlier circulars with effect from 22.10.2009 has no bearing in the instant case. It is worth mentioning that the previous year involved in 2006- 07 relevant to the assessment year under consideration. At the relevant time, in view of the C.B.D.T. circular No.23 dated 23.7.1969 and circular no.786 dated 7.2.2000, the assessee was not obliged to deduct the tax under Section 195 of the Act and the circular No.7 of 2009 dated 22.10.2009 withdrawing the circular No.23 of 1969 and circular No.786 of 2000 will be operative only from 22nd October, 2009 and not prior to that date. Decision relied upon by the AO in the case of Van Oord ACZ India (P.) Ltd.[2007 (11) TMI 332 - ITAT DELHI-D] has been overruled by Hon'ble Delhi High Court [2010 (3) TMI 167 - DELHI HIGH COURT]as concluded that Obligation to deduct tax at source u/s 195 is attracted only when the payment is chargeable to tax in India; IT authorities having accepted: that the non-resident recipient is not liable to pay any tax in India, the assessee- payer was not liable to deduct tax at source under s. 195(1) in respect of the mobilization and demobilization costs reimbursed by it to the said non-resident company. Decided against revenue.
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