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2022 (5) TMI 98 - AT - Income TaxTDS u/s 195 - Disallowance of commission u/s 40(a)(ia) - payments made on account of commission, exhibition expenses and testing expenses - assessee has argued before us that there is no sum chargeable to tax as all the payees are of outside India, there is not a single party in whose case the criteria for their residency for charging to tax in India is proved, services are also rendered outside India - HELD THAT:- DR has not pointed that why and how the decision that is relied upon by the AO which in detailed distinguished by the Ld CIT(A) are in correct. In fact, the department has accepted the contention that this sum is not disallowable as the subsequent assessment is completed by the department at retuned income. Not only that the ld. DR has also not countered the notable argument of the AR of the assessee that the subsequent year i.e. 2017-18, the AO raised a pointed query in a notice issued to the assessee and the assessee filed a detailed reply vide letter dated 25.01.2021 and Ld. AO after considering the overall facts presented being similar to the year under considered preferred not to make any addition on the similar issue and has accepted the contention of the assessee for that A. Y.2017- 18. Considering this development for the subsequent year even the disallowance made by the AO shall not sustained as the claim under this year is similar with that of A. Y. 2017-18.On this aspect Ld. DR choose to remain silent, whereas, the Ld. AR of the assessee relied on the judicial decision that in absence of any material change in the facts and circumstances, the Rule of Consistency require that the view already taken must be followed in later years as well and has relied on the judgment in the case of Godrej & Boyce Manufacturing Company Ltd. [2017 (5) TMI 403 - SUPREME COURT] Undisputed facts are that the commission has been paid to various nonresident entities in respect of sales affected by the assessee outside of India, the services have been rendered outside of India and the payments have been made outside of India. In light of these undisputed facts, the legal proposition laid down in the aforesaid decision equally applies in the instant case and such commission payment cannot be held chargeable to tax in India. Similarly the exhibition expenses have been paid in respect of participation in various exhibitions held outside of India and even the testing charges have been paid for testing services outside of India. Therefore, these payments will not fall in the category of income which has accrued or arisen or deemed to accrued or arise in India. Further, payments have been made outside of India. Accordingly, we are of the considered view that there was no liability to deduct tax at source u/s 195(1) as these payments are not chargeable to tax and the provisions of section 40(a)(ia) cannot be invoked in the instant case.- Decided in favour of assessee.
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