Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 182 - AT - Income TaxTDS u/s 195 - payments made to non-residents - tds liability - PE in India - income accrued in India - Held that:- It is noticed that the assessee company has been regularly exporting its products with the help of overseas dealers. It is undisputed fact that the commission were paid to such non-resident agents in respect of all the services rendered by them related to the export made by the assessee outside India. There was no permanent establishment / office of these agents or any infrastructure situated in India. These agents have carried out all their activities outside India and commission was paid for the activities carried out side India. Section 195 is applicable only if the payments made to non-residents are chargeable to tax. If the payment is not chargeable to tax under the act, the payer would not be liable to deduct tax at source under the act. Section 4 of the act provides that income tax shall be charged for a particular year in accordance with the provision of the act. Section 5 of the act deals with the scope of the total income of the non-residents and takes within the scope two types of income, the income which is received or deemed to be received in India and second one the income accrues or arises or deemed to accrues or arise in India. In the case of the assessee we are dealing with the second part of the scope of income pertaining to income deemed to accrue or arise in India. Section 9 of the act provides for the income deemed to accrue or arise in India. It is noticed that no income is deemed to accrue or arise in India by applying the provisions of section 9 (l)(i) as the assessing officer has failed to establish accruing or arising of any income from business connection in India or through or from any property or through the transfer of a capital asset situated in India. There was no material which can demonstrate that any of the agents had any Permanent Establishment in India as all the agents had their establishments situated in the overseas places. CIT(A) it is clear that the Provisions of section 9(1)(i) cannot be applied, therefore we consider that the CIT(A) has rightly deleted the impugned disallowance of commission payment made to the foreign agents. - Decided in favour of assessee. Addition u/s 14A - Held that:- After perusal of the above facts and material on record it is noticed that during the year under consideration the assessee company has earned exempt income to the amount of Rs. ₹ 5,25,837/- only. JIVRAJ TEA LIMITED VERSUS DCIT, CIRCLE-1, SURAT [2014 (9) TMI 131 - ITAT AHMEDABAD] on similar issues have restricted the disallowance u/s. 14A to the extent of exempt income earned by the assessee, therefore, we restrict disallowance u/s. 14A in the case of the assessee to the extent of exempt income earned of ₹ 5,25,837/- . On the similar reasons disallowance u/s. 14A in respect of A.Y. 2011-12 is also restricted to the extent of exempt income of ₹ 15,47,552/-Accordingly, the appeal of the assessee is partly allowed.
|