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2015 (1) TMI 736 - AT - Income TaxRevision u/s 263 - AO chose not to make any disallowance u/s 40(a)(i) on foreign commission received - Held that:- The amount of commission income for rendering services in procuring export orders outside India is not chargeable to tax in the hands of the non-resident agent and hence no tax is deductible under section 195 on such payment by the payer. Resultantly, no disallowance is called for u/s 40(a)(i) of the Act. At this juncture, it is pertinent to note that we are dealing with an appeal against the order passed u/s 263 of the Act. It is settled legal position that there can be no revision on a debatable issue as held in Malabar Industrial Company Ltd. Vs. CIT (2000 (2) TMI 10 - SUPREME Court) and CIT vs. Max India Ltd. (2007 (11) TMI 12 - Supreme Court of India) wherein held that when two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the ITO is unsustainable in law. Adverting to the facts of the instant case, it can be seen that the AO, after considering certain decisions relied by the assessee favouring non-deduction of tax at source in the present circumstances, accepted the assessee’s contention. The fact that the decision of the Authority for Advance Ruling, relied by the ld. CIT, favours the Revenue’s case, at the maximum, makes the issue about deduction of tax at source from foreign commission, a debatable one. In view of such a cleavage of opinion, this debatable issue goes outside the purview of section 263. We, therefore, set aside the impugned order. Decided in favour of assessee.
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