Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 479 - AT - Income TaxTDS u/s 195 - disallowance made u/s 40(a)(i) - export commission paid to overseas agents, who arrange for exports and procure export orders for the assessee - assessee pleaded that these overseas agents are not having any permanent establishment (PE) in India and are residents of the respective foreign countries - CIT(A) also held that the payment of commission made to non-resident agents is not chargeable to tax in India in terms of section 195 of the Act and hence, there is no requirement to deduct tax at source as no part of income arises in India in the hands of the said non-resident agent - HELD THAT:- It is not in dispute that the non-resident agents to whom commission was paid by the assessee have rendered services outside India for sale of the goods of the assessee outside India. It is not in dispute that the said non-resident agents do not have any PE in India and that they are domiciled in U.K and USA. In view of these facts, it could be safely concluded that there is no income chargeable to tax in India in terms of section 195(1) of the Act in the hands of the non-resident agents and accordingly, the provisions of section 195(2) of the Act would not come into operation at all. Reliance in this regard had been rightly placed by the Ld. CIT(A) on the decision of Hon’ble Apex Court in the case of GE Technology Center Pvt.Ltd. [2010 (9) TMI 7 - SUPREME COURT] wherein held The parties merely source the prospective buyers for effecting sales by the assessee, and is analogous to a land or a house / real estate agent / broker, who will be involved in merely identifying the right property for the prospective buyer / seller and once he completes the deal, he gets the commission. Thus, by no stretch of imagination, it cannot be said that the transaction partakes the character of "fees for technical services" as explained in the context of Section 9(1)(vii) of the Act. As the non-residents were not providing any technical services to the assessee, as held above and as held by the Commissioner of Income Tax (Appeals), the commission payment made to them does not fall into the category of "fees of technical services" and therefore, explanation (2) to Section 9(1)(vii) of the Act, as invoked by the Assessing Officer, has no application to the facts of the assessee's case. We hold that under factual matrix of the case no additions u/s 40(a)(i) of the 1961 Act read with Section 195 are warranted in the instant case on payments made by assessee to four overseas agents towards commission expenses for generating export orders or facilitating import for the assessee. We affirm the decision of learned CIT(A) and Revenue fails in this appeal. Disallowance u/s 14A of the Act r.w.Rule 8D(2) of the I.T.Rules - HELD THAT:- We find that during the year under consideration, the assessee had not earned any exempt income from the investments made by it, on which fact, there is no dispute. We find that the Ld. AO proceeded to make disallowances in the sum of ₹ 3,78,632/- being the disallowances worked out u/s 14A of the Act r.w.Rule 8D(2) of the I.T.Rules CIT(A) deleted the said disallowance on the ground that since, no exempt income has been earned, there cannot be any disallowance made u/s 14A of the Act by placing reliance on the decision of various High Courts. We find that various High Courts already had held that when there is no exempt income, the disallowance u/s 14A of the Act would not come into operation at all. Hence, we do not find any infirmity in the order of the Ld. CIT(A) granting relief to the assessee in this regard. - Decided against revenue.
|