TMI Blog2011 (3) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in the respective country, would not be sufficient to come to a conclusion that assessee need not have made any exports to such country but the supply ought have been made only by the group concern in the said country. There could have been a myriad of reasons for the assessee and assessee’s group concerns abroad, to source its’ supplies from assessee, to its’ ultimate customers and such a decision taken by a businessman could not have been question by an Assessing Officer without conclusively proving that such sourcing was a colourable exercise. The order the TPO mentioned above clearly prove that there was no colourable exercise nor excessive billing. - Decided in favor of assessee. Nature of commission - fee for technial services - N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prices negotiated by the group concerns located in the respective countries. Submission of the assessee was that the difference between the price at which the supplies were made and at which the group had agreed with the respective customers were paid as commission to the group companies, in the respective countries by way of credit note. Assessing Officer was of the opinion that assessee was doing business with the group companies and all assistance for selling the product in such countries were presumably made by the group companies. According to Assessing Officer, the group companies were producing the same products in such countries and there was no necessity for supply to be made by the assessee to the customers in such countries. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerns. The argument of the assessee was that it was simple commission payment for procurement of orders and there was no technical service associated as such. Assessee also submitted that the payments would also not be "royalty" since there was no transfer of any rights or any use of patent or use of information imported from the associated concerns outside India. There was no managerial or consultancy services outside India and hence according to the assessee there was no requirement for it to deduct tax at source, when the payments were purely commission. Assessee also relied on the order of the Transfer Pricing Officer dated 16-10-2008 under section 92CA of the Act wherein the Transfer Pricing Officer (TPO for short) had stated that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mainetti group which had its principal at Italy. According to the ld.AR, supplies made to various customers outside India were as per prices negotiated by the Mainetti group concerns situated in such outside countries and assessee was obliged to give commission to such concerns on price it received over and above the normal sale price. Further as per ld.AR, in view of the decision of Hon ble Apex Court in the case of GE India Technology Cen. (P.) Ltd. v. CIT [2010] 327 ITR 456/193 Taxman 234, assessee having not deducted tax on a bona fide belief that it was only commission payment, not coming within the ambit of a payment on which tax was deductible at source, the disallowance under section 40(a)(i) was not justified. 6. We have perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of international transactions entered into by the assessee. Accordingly, the international transactions referred, are accepted to be at Arm's Length Price. It is hereby clarified that the findings and discussions made in this order are applicable only in respect of reference received for assessment year 2005-06 and not for any other assessment year." So we do not find any justification for the conclusion of the Assessing Officer that there was no involvement by the group company for the commission payment. Just because group concern also produced same product in the respective country, would not be sufficient to come to a conclusion that assessee need not have made any exports to such country but the supply ought have been made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, with consequences of a nature mentioned in section 40(a)(i) of the Act. In our opinion, there was no question of deduction of tax being made by the assessee on the commission payment abroad. However from the list submitted by the assessee we find that a sum of Rs. 2,37,648 was domestic commission and only Rs. 1,43,79,347 was commission paid overseas. For domestic commission of Rs. 2,37,648 assessee was liable to deduct tax at source if the payment exceeded the limit prescribed under the Act. Hence while holding that there was no failure on the part of the assessee for warranting a disallowance insofar as it related to overseas commission of Rs. 1,43,79,347. we are of the opinion that the balance of Rs. 2,37,648 being domestic commission, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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