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2012 (12) TMI 838 - AT - Income TaxNon-deduction of TDS on payment of Export Commission - disallowance u/s 40(a)(ia) - CIT(A) deleted the addition - Held that:- Incontrovertible evidence on record that the payment of commission has been made to agents outside India for services rendered outside India. The relationship between the assessee and the agents are principal to principal. The agents to not have any PE in India. Any tax that would accrue or arise is only outside the country and not in India. Very importantly this payment does not also fall within the ambit of Section 9(1)(vii) as the services under consideration is not for any technical service rendered nor could be taken as a job which was managerial in nature. It is only for facilitation of the sales of the assessee outside India. There was no agreement between the assessee and the agents and no such agreement was even required, since the transaction was of payment of commission for services rendered- as decided in CIT, A. P. Versus Toshoku Limited (and Another Appeal) [1980 (8) TMI 2 - SUPREME COURT] sales commission which were earned by the non resident for services rendered outside India could not be deemed to be income which had either accrued or arisen in India - Thus the assessee was held not to be liable for TDS under Chapter XVII-B of the Act - against revenue. Addition on account of retention money - Held that:- The facts are that the customer retains money in respect of a completed contract for satisfactory performance of the contract for which the due diligence is undertaken. On demonstration of satisfactory performance of the contract, the money as released finally to the assessee, otherwise it has to repair the fault or pay liquidated damages. Thus such money withheld by the customer does not accrue as income to the assessee on completion of the turn-key project, the reason being that right to receive the money does not accrue to the assessee. This money accrues as income when the stipulated condition is satisfied which may be in the nature of showing satisfactory performance of the project. Therefore, the amount is taxable on accrual basis in the year in which stipulated condition is satisfied. Thus following the Tribunal's order in the assessee's own case for AY 2007-08 the amount in question does not accrue as income to the assessee on raising the bill after completion of the project. Rather, the income arises on performance of the conditionalities of the agreement - against revenue.
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