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2014 (1) TMI 440 - AT - Income TaxDeletion of disallowance u/s 40(a)(i) of the Act – Liability to deduct tax at source on the commission payments made to non-residents u/s 195 of the Act – Held that:- The non-residents are only procuring orders for the assessee and following up payments, no other services are rendered other than procuring the orders and collecting the amounts - The non-residents are not providing any technical services to the assessee - The commission payment made to non-residents also does not fall under the category of royalty or fee of technical services, therefore the Explanation to sub-section (2) of section 9 has no application to the facts of the assessee's case – Following GE India Technology Cen. (P.) Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] - the assessee is not liable to deduct TDS when non-residents provided service outside India - when the services are provided outside India, the commission payments made to non-residents cannot be treated as income deemed to accrue or arise in India, therefore, the provisions of section 195 has no application - In order to invoke the provisions of section 195 of the Act, the income should be chargeable to tax in India - the commission payments to non-residents are not chargeable to tax in India, thus, the provisions of section 195 are not applicable – order of the CIT(A) upheld – Decided against Revenue.
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