TMI Blog2014 (10) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... ign agents have provided services for earning commission and the services have been rendered outside India, the Commission so earned by non-resident is a business profit – the question framed was not challenged before the Tribunal, then on what basis substantial question of law can be said to be raised - This shows the lackadaisical approach of the revenue officers - the question does not arise out of the order of Tribunal. It is a finding of fact arrived at by the CIT(A) after elaborate discussion that rate of commission was same for all the foreign agents and when AO has been satisfied about other payments nothing was brought on record by the AO to justify about disallowance of commission payment to these two foreign agents, merely bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to payments of commission to non-resident agents and in view of the circular of the Central Board of Direct Taxes, bearing No.786 dated. 07/02/2000, it was not required to deduct tax at source on the said commission payments, however, the Assessing Officer (for short, 'AO') was of the view that in view of the latest Circular No.7 dated. 22/10/2009, which came to be issued by the Central Board of Direct Taxes before completion of the assessment, therefore, the said circular is applicable and in the light of the said circular, the assessee was liable to deduct tax at source on payments made to the non-residents referred to above and since the assessee failed to deduct tax at source and to pay in the Govt. treasury account under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the previous year relevant to the year under appeal, there was no liability of the assessee to deduct tax at source u/s 195 of the Act and accordingly he was of the view that provisions of Section 40(a) (ia) cannot be invoked and are inapplicable and thus deleted the entire disallowance. The CIT(A) also discussed the grounds relating to business expediency and rejected the finding of the AO. 4. Dissatisfied with the deletion of the disallowance under Section 40(a) (ia), the revenue carried the matter in appeal before the ITAT. However, before the ITAT, the ground raised by the revenue pertained to challenging the order under Section 40(a) (ia) only and in so far as the ground relating to business expediency of the payments, the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at source and was not deducted, the AO was well within the provisions of law to disallow the entire amount under Section 40(a) (ia) of the IT Act. He also contended that the assessee was unable to prove business expediency of making huge payment of approximately about ₹ 6 crores. He thus contended that the provisions of Section 40(a) (ia) and interpretation of Circulars is required to be seen and therefore, substantial question of law arise out of the order of the Tribunal. 6. We have considered the arguments advanced by learned officer appearing on behalf of the appellant revenue and have also perused the impugned order and other orders. 7. Section 40(a) (ia) of the IT Act provides that the amount can be disallowed under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been received by or on behalf of the agent in India. Such payments were therefore held to be no taxable in India. The relevant sections, namely, section 5(2) and section 9 of the Income-tax Act, 1961, not having undergone any change in this regard, the clarification in Circular No.213 still prevails. No tax is therefore deductible under section 195 and consequently, the expenditure on export commission and other related charges payable to a non resident for services rendered outside India becomes allowable expenditure. On being appraised for this position, the Comptroller and Auditor-General have agreed to drop the objection referred to above. 8. From perusal of relevant Para 2 of the aforesaid circular, it clearly specifies t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the facts of the instant case or can be said to be retrospective in nature or even clarificatory in nature. 9. Though the ld. officer argued that huge payments to the tune of about ₹ 6 crores were made to the aforesaid agents and no business expediency was proved/established by the assessee, we notice that even the question of law is framed to the above effect but we are surprised that before ITAT when the revenue did not raise/challenge the said issue, then on what basis substantial question of law can be said to be raised. This shows the lackadaisical approach of the revenue officers. Thus, the said question does not arise out of the order of ITAT. Be that as it may, even otherwise it is a finding of fact arrived at by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
