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2018 (11) TMI 782 - AT - Income TaxTDS u/s 195 - commission payments made to the non-resident agents - Held that:- Once we come to the conclusion that the income embedded in these payments did not have any tax implications in India, no fault can be found in not deducting tax at source from these payments or, for that purpose, even not approaching the AO for order u/s 195. The assessee, for the detailed reasons set our above, did not have tax withholding liability from these payments. As held in the case of GE India Technology Centre (P.) Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] payer is bound to withhold tax from the foreign remittance only if the sum paid is assessable to tax in India. The assessee cannot, therefore, be faulted for not approaching the Assessing Officer under section 195 either. As regards the withdrawal of the CBDT circular holding that the commission payments to non-resident agents are not taxable in India, nothing really turns on the circular, as de hors the aforesaid circular, we have adjudicated upon the taxability of the commission agent's income in India in terms of the provisions of the Income Tax Act as also the relevant tax treaty provisions. Addition on account of prior period expenses - Held that:- We find that in the case of Saurashtra Cement & Chemical Industries Ltd Vs CIT [1994 (10) TMI 30 - GUJARAT HIGH COURT] has, inter alia, observed that “Merely because an expense relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis” but that is precisely what has been upheld in the impugned order. It is not the case of the revenue that the expenses have been claimed twice but the short ground of disallowance is that since the expenses pertain to an earlier year, these expenses cannot be allowed. That approach is impermissible in law. - direct the Assessing Officer to delete the impugned disallowance - decided in favour of assessee.
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