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2020 (5) TMI 230 - AT - Income TaxTDS u/s 195 - payments made by the appellant & AST Enterprise Inc., UAE for import of commodities - assessee to prove that agents are not securing orders in India mainly or wholly for non-residents - HELD THAT:- Authorities have considered from the material placed before it that the agent is working mainly or wholly on behalf of the non-resident on the ground that more than 50% of the commission receipt is received from the non-resident. CIT(A) has also observed that an agent is regarded as economically dependent on the principal if it derives major revenue from principal or if he services the principal and bear entrepreneurial or business risk. CIT(A) observed that agent namely M/s. Ashapura Commodities it is stated that PKT Associates is from main client. In our view, this basis of the Ld. CIT(A) is not in confirmity with the law. The agent may be main client, but the law mandates that the non-resident should be the main client of the agent. Therefore, this reasoning of the Ld. CIT(A) cannot be affirmed. The A.O. has also observed that 52% of the revenue of the agent is from non-resident. In our view, 52% of the revenue would not make the agent falling in the category of the working mainly for the non-resident. Reliance is also placed on the circular no.23/1969 dated 23.7.1969. See HINDUSTAN SHIPYARD LIMITED [1975 (4) TMI 9 - ANDHRA PRADESH HIGH COURT] We find merit into the contention that under the facts of the present case, it cannot be considered that the agent was mainly working for the non-resident. Moreover, the assessee has furnished various documents to demonstrate that agent was a general commission agent. He therefore, has no liability for deduction of tax cannot be fastened on the assessee. Therefore, we set aside the order declaring the assessee as assessee in default and direct the A.O. to delete the additions so made. Hence, ground No.1 of assessee's appeal is allowed.
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