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2017 (6) TMI 868 - AT - Income TaxTDS u/s 195 - commission expenditure, allowed to non-resident agents - fee for technical services - DTAA - P.E. in India - nature of services - Held that:- The warehousing, logistic, inventory management, marketing and other support services being provided by the foreign agents cannot be described as ‘fee for included services’ or, as the case may be, ‘fee for technical services’, as defined under the relevant DTAAs, but only as business profits. We have also examined the impugned payments from the stand-point of the same qualifying as ‘royalty’, to find the same as not falling within the meaning of the term as defined under the relevant Articles. The foreign agents having no PE in India, the commission (remuneration) allowed to them for the said services, is not taxable in India. There is accordingly no liability to deduct tax at source u/s. 195 of the Act thereon. Section 40(a)(i) shall, therefore, not apply in respect of the impugned payments. There is no finding with regard to the foreign agents being tax residents of USA or, as the case may be, UK; the assessee not making it’s case with reference to the relevant DTAAs before the Revenue. Accordingly, subject to finding of it being so, we direct the deletion of the impugned disallowance. Disallowance of deduction u/s.10B - Held that:- he assessee’s undertaking ostensibly satisfies all the conditions of s. 10B, stands granted the approval by the Development Commissioner, to whom the power of approval has been delegated by the Board constituted u/s. 14 of the I(D&R) Act.We are thus not inclined to accept the reasons advanced by the ld. CIT(A) for not admitting the assessee’s evidence. So, however, to the extent that the matter would require being examined by the AO, we are in agreement with the ld. CIT(A). Accordingly, admitting the said letter, along with the other related documents, we restore the matter back to the file of the AO for necessary verification and adjudication afresh on merits. Deduction u/ss. 80G and 80-IB - Held that:- A ssessee’s income as per the returns filed is at a loss in fact endorses it’s stand of having not claimed the deductions in the absence of adequate GTI u/s. 80B(5) of the Act. Further, the particulars with regard to deductions stand furnished per the revised claim vide return dated 16.03.2011. We therefore find no reason for the Revenue for not entertaining the same. We may though clarify that our finding is limited to the right of the assessee in pressing its said claims. The AO shall consider the same on merits, deciding in accordance with the law. Computation of interest chargeable u/s. 234D - Held that:- The language of the section is unambiguously clear. The same refers to the amount of refund without breaking it into or defining it in terms of its’ elements. The interest chargeable there-under is compensatory in character, as in fact is the interest granted u/s. 244A. The Apex Court in CIT v. H.E.G. Ltd. [2009 (12) TMI 35 - SUPREME COURT] directed for grant of interest u/s. 244A for the period of delay in grant of interest u/s. 244A itself; having been not granted along with the grant of refund of tax, so that it had assumed the character of the principal. Thus no merit in the assessee’s claim of the interest u/s. 234D being restricted only to the tax component of the demand raised or the excess refund.
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