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2015 (6) TMI 708 - AT - Income TaxDisallowance u/s 40(a)(i) - 'Export Sales Commission' payments made to the non resident u/s.195 - CIT(A) deleted the disallowance - whether the assessee’s commission payments made to its overseas agents in lieu of procuring export orders amount to ‘fee for technical services’ or not u/s 9(1)(vii)? - Held that:- Section 9(1)(vii)(b) has to be taken as part of section 9(1)(vii). Once the former provision stipulating fee for technical services itself is not applicable, latter limb cannot be invoked in isolation. We make it clear that there is no evidence placed on record proving any ‘technical services’ element in procurement of export orders. It is evident that the assessee’s overseas export agents have merely collected export orders in lieu of direct remittances. We find that the hon'ble jurisdictional high court in CIT vs Faizan Shoes Pvt. Ltd. [2014 (8) TMI 170 - MADRAS HIGH COURT] has held in identical circumstances that such an export commission payment does not amount to ‘fee for technical services’. The Revenue heavily relies on the case law of Transmission Corporation of Andhra Pradesh vs CIT - [1999 (8) TMI 2 - SUPREME Court ]. The hon'ble apex court has itself distinguished the said case law in GE India Technology Cen. P. Ltd vs CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] in clear terms that section 195 would only apply if the payment in question is taxable as income in India and not otherwise. The said issue stands already decided against the Revenue. - Decided in favour of assessee.
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