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2015 (11) TMI 1447 - ITAT MUMBAITDS u/s u/s. 195(2) - maintainability or otherwise in law of section 40(a)(i) payment on Freight - Held that:- With regard to freight allowed to shipping companies, the matter, in our view, is squarely covered against the assessee by the decision in the case of Orient (Goa) (P.) Ltd. (2009 (10) TMI 575 - Bombay High Court ) wherein held that payment of demurrage charges, which assume the same nature as of freight charges, to a non-resident without deduction of tax at source, would attract section 40(a)(i) of the Act, i.e., unless certified for non-deduction u/s. 195(2). - Decided against assessee. Maintainability or otherwise in law of section 40(a)(i) payment on Commission - Held that:- Manner in which the business is undertaken, putting across this scenario, would fairly submit that the same is a distinct possibility, though he was not in a position to so affirm or commit in the matter. This is precisely why we stated both the assessee and the Revenue to be responsible for a complete factual indetermination of the matter. Merely stating that no services are rendered in India is under the circumstances of little consequence. It is, again, upon examining and ascertaining the nature of the services that the AAR in Wallace Pharmaceutical (P.) Ltd. (2005 (9) TMI 26 - AUTHORITY FOR ADVANCE RULINGS ) held that the services provided by Penser Group, a tax resident of USA, were not limited to USA and, further, utilized in India and, accordingly, payments thereto warranted deduction of tax at source. The AAR has, in our view, sought to correctly apply the law in the matter – the issue being principally factual. It is again on account of this that the Hon’ble Court in Elkem Technology (2001 (4) TMI 65 - ANDHRA PRADESH High Court ), upon examining the nature and scope of the activities, held that no question of law, much less a substantial question of law, arises. In the case of Toshoku Ltd. (1980 (8) TMI 2 - SUPREME Court ), the product was ‘tobacco’, essentially a commodity (or a generic product), and which could be sold as such, adhering to the specifications as may be stipulated by law. Under the circumstances, in view of the foregoing, we only consider it fit and proper, even as observed during hearing – and to the agreements by the parties, that the matter, setting aside the impugned order, is restored for proper factual as well as legal determination back to the file of the Assessing Officer (A.O.), who shall decide the same after allowing the assessee reasonable opportunity to present its case before him. Decided in favour of assessee for statistical purposes.
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