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2018 (4) TMI 81 - AT - Income TaxNon deduction of tds on payment to non-residents - disallowance of sales commission to foreign agents - PE in India - income deemed to accrue or arise in India - DTAA - Held that:- The assessee has a choice of applying either the provisions of the DTAA or the Income-tax Act, whichever is more beneficial to him. In view of the articles of the DTAA, for holding the fee for technical services as liable to tax in source country, the services should make available the technical knowledge etc to the assessee of the source country. AO has not been able to establish that the services of procuring orders has made available any technical knowledge, experience, skill know-how etc. to the assessee, and, therefore, in our considered opinion, the services rendered by the non-resident agents cannot be taxed as fee for technical services under the DTAA. We hold that income from services of the non-residents of procuring orders are not chargeable to tax in India and, therefore, assessee was not liable to deduct tax at source on the payments of commission made to those agents, accordingly, no disallowance could have been made under section 40(a)(i) of the Act. The finding of the Ld. CIT(A) on the issue in dispute is upheld and accordingly, the ground of the appeal of the Revenue is dismissed.
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