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2021 (6) TMI 703 - AT - Income TaxTDS u/s 195 - Disallowance of commission expenditure paid to foreign agents for non-deduction of tax - HELD THAT:- It is not the case of the revenue that export commission income of foreign agent for soliciting orders from outside India was earlier chargeable to tax and CBDT circulars exempted it. Withdrawal of those circulars does not have any impact on taxability of export commission and TDS there on. In the present case It is an established fact that agents are non-residents, operating their business activity outside India, commission payments is related to their service rendered outside India and Revenue could not show that those commission agents have any permanent establishment in India. Assessee has consistently denied that they do not have any permanent establishments in India. Further the commission was remitted to them directly outside India. The issue is squarely covered in favor of the assessee that foreign commission paid to foreign agents no tax is required to be deducted u/s 195 of the Act and, therefore, disallowance u/s 40(a)(ia) has correctly been deleted. Thus, we confirm the order of the Id. CIT (Appeals) and dismiss ground Nos. 1 and 2 of the appeal of AO. Disallowance of commission - Allegation of the AO was that commission paid to Rohit Anand (HUF) is for rendering services, but the commission is paid to HUF - HELD THAT:- In the present case the rendition of the service is not in dispute. The taxability of commission income in the hands of the recipient in the status of Individual or HUF cannot be of relevant consideration to make any disallowance in the hands of the assessee. Thus, when the rendition of service is not in doubt, amount of commission paid is also not questioned, the tax deduction at source on commission is verified and when the payment is made by account payee cheque, in all these combined circumstances we do not find any merit in ground No. 3 of the appeal. Addition on account of interest on investment when the assessee had not sufficient interest free funds available - HELD THAT:- We find that assessee has shown capital of ₹ 28,00,000/- and also interest free loan from family members of ₹ 1,05,90,000/- against which the investment in property is merely ₹ 28,93,600/-, Thus there was enough interest free funds available with the assessee. Thus the action of the Id. Assessing Officer to disallow the interest on the above sum @ 12% out of above interest paid by the assessee of ₹ 13,91,000/- is not correct and hence, correctly been deleted by the Id. CIT (Appeals). DR could not show any error in the order of the Id. CIT (Appeals). Thus, ground No. 4 of the appeal is dismissed.
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