TMI Blog2015 (3) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... th these appeals of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting disallowance made by the Assessing Officer under section 40(a)(i) of the Act on account of non-deduction of TDS on the agency commission paid by the assessee to its non-resident agents. 2. The Assessing Officer while completing assessments for both these assessment years disallowed agency commission payments made to non-resident agents as the assessee did not deduct TDS under section 195 of the Act. The Assessing Officer invoking provisions of section 40(a)(i) of the Act disallowed such payments made by the assessee to non-resident agents. The Assessing Officer was of the view that since the Board has withdrawn Circular No.786 dated 7.2.2000 which deals with payment of export commission to non-resident agents, the payments made by the assessee towards sales commission to non-resident agents is liable for TDS under section 195 of the Act. On appeal, the Commissioner of Income Tax (Appeals) following the co-ordinate Bench decision of this Tribunal in the case of M/s.Farida Shoes Pvt.Ltd. and also the decision of Hon ble Supreme Court in the case of G.E. India Technology Centre (P) Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made certain payments to overseas agents as commission and no TDS deducted. According to the Assessing Officer, the assessees' business is situated in India and the payments were also made from India and according to section 195, the assessee is under obligation to deduct TDS. Therefore, by invoking section 40(a){i), he has disallowed an amount of ₹ 5, 62,13,826/ - . On appeal, the CIT(Appeals) deleted the disallowance on the ground that the commission was paid to non-resident agent and it cannot be said to have been accrued in India and section 195 have no application. The only issue for our consideration is as to whether the assessee is under obligation to deduct the TDS under section 195 or not The CIT(Appeals), by considering the entire facts and circumstances of the case passed a detailed order by observing that section 195 have no application to assessee's case. In the case of M/ s. Prakash Impex v. ACIT (supra), the Coordinate Bench of !TAT Chennai has considered the very same issue and observed that the commission paid to nonresident agent for the services rendered outside India and such payments are not chargeable to tax India and therefore, the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gent for procuring export orders. The agents have not been provided any managerial/technical services. The relationship between the assessee and the nonresident (agent) was only for rendering nontechnical services. Moreover, there was no permanent establishment of the said nonresident in India. Therefore, the commission paid to the non- resident agent did not accrue or arise in India and thus, there was no need for deducting TDS under section 195 of the Act. 14. In the present case, the assessee paid certain amounts too overseas agents for procurement of export orders. The agents have not provided any managerial/technical services. The payments received by the nonresident Indian are not taxable in India. Taking into consideration of entire facts . and circumstances and by following aforesaid decisions, we are of the opinion that the issue involved in this appeal is covered in fauour of the assessee and section 195 have no application to assessee's case. Accordingly, the appeal of the Revenue is dismissed. In the instant case also, the assessee company is engaged in the business of export of engineering goods (in the cases of Farida Shoes P Ltd and Delta Shoes P Ltd the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31.07.2013), has examined the issue of commission payments to non-residents for procuring export orders in detail and concluded that the commission payments to the said non-resident agents are not assessable to tax in India and consequently the resident payee company (M/s. Farida Shoes P Ltd y Delta Shoes P Ltd) was not under the obligation of deduction TDS on the commission payments u/s.195 of the Act. In the present appeals of the assessee (i.e. in the A.Ys. 2009-10 and 2010-11) also the facts and circumstances are exactly identical to those involved in the case of M/s. Farida Shoes P.Ltd. for A.Y.2008-09 (except the type of product exported.) Therefore, since the issue involved in the present appeals is the same and the facts are exactly identical, the above decision of the !TAT, (M/s. Farida Shoes P Ltd, in ITA No.159 /Mds/20 13 dated 11.04.2013), is equally applicable to the facts of the present appeals of the instant assessee for A.Ys. 2009-10 and 2010-11 under consideration. Therefore, respectfully following the decision of !TAT, in the case of M/s. Farida Shoes p Ltd (in ITA No.159/Mds/2013 dated 11.04.2013), I hold that the above transactions of commission paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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