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2012 (10) TMI 431 - AT - Income TaxCommission paid to non resident agent - Assessing Officer found that the assessee has paid an amount of Rs.80,50,703/- to non resident agents without deducting tax at source. The AO therefore disallowed the entire amount u/s 40(a)(i) and added it to the total income.The CIT (A)‘s order was challenged in appeal before the ITAT. Held that:- The reasoning of the AO that since the DDs have been purchased from banks in India and have been sent through courier, the payment of commission deemed to have been paid in India is also not acceptable. - the AO has failed to bring any material on record to show that the payments were made to the non resident agents in India at the request of the foreign agents. Non resident agents did not carry out any business operations in India and has acted as selling agents of the assessee outside India. Therefore, the commission earned by them for services rendered by them outside India cannot be considered as income chargeable to tax in India as non resident do not have any permanent establishment in India Therefore, when the commission paid to the non residents are not chargeable to tax under the provisions of the Act, no deduction of tax is required to be made u/s 195(1) of the Act and disallowance made u/s 40(a)(i)by Assessing officer is not sustainable - against revenue.
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