TMI Blog2015 (3) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts. So, there is no ground to adopt a different approach in the present case. The Revenue also pleads that the assessee’s headquarter is in India. So, this exclusion clause does not apply. We notice that in case law Lufthansa Cargo India (P) Ltd vs DCIT [2004 (6) TMI 273 - ITAT DELHI-B], head office or place of control of business have been held to be immaterial factors for this exclusion principle u/s 9(1)(vii)(b) of the Act. The Revenue does not dispute applicability of this decision in its grounds. The Revenue further contention that in view of explanation inserted by the Finance Act, 2010 with retrospective effect from 1.6.1976, it is immaterial as to whether the services have been rendered outside India or the payee does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad filed its return on 1.12.2003 admitting loss of 32,84,971/-. The same was summarily processed. Thereafter, the Assessing Officer completed a regular assessment on 22.8.2006 reducing the loss declared to 22,74,779/-. 3. After framing of regular assessment, the Assessing Officer formed reasons to believe that the assessee s income liable to be taxed had escaped assessment. He issued section 148 notice dated 31.3.2008. The assessee reiterated the income already returned. In re-assessment, the Assessing Officer found the assessee to have paid a sum of 2,02,21,560/- as service charges in foreign currency. This comprised of a sum of 1,57,79,352/- towards per-diem allowances paid to resident employees outside India and payment in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ajapa Integrated Project Management Consultant Pvt. Ltd I.T.A.No.2169/Mds/2010 holding this exclusion applicable if the payment is made to a non-resident for the purpose of earning income from a source outside India. The CIT(A) concludes that these payments pertain to the assessee/consultancy firm s overseas Nigerian contracts. So, the fees paid to such consultants abroad have been held to be for services utilized in the business carried outside India not liable for any TDS deduction. The CIT(A) has deleted the impugned disallowance. The Revenue is in appeal by raising following grounds: 2. The Id CIT(A) erred in holding that provisions of Seco40(a)(i) are not attracted towards expenditure incurred on payment of services charges paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pradesh reported in (239 ITR 589 (SC) clearly held that TDS should be effected at the rates in force, if the amount is paid to a non-resident. The rights of the payee or the recipient are fully safeguarded under sections 195(2), 195(3) and 197 2.6 The assessee has not obtained certificate u/s.195(2) of the Act to be exempt from the purview of TDS and hence the AO has rightly disallowed the Commission paid to foreign agents, u/s 40(a)(i) of the I.T. Act 2.7 It is submitted that the assessee did not submit any application for non deduction of tax at source before the TDS authorities. 5. In the course of hearing, the Revenue reiterates the aforesaid pleadings and submits that the CIT(A) ought to have upheld the impugned disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s grounds. 9. The Revenue further contends that in view of explanation inserted by the Finance Act, 2010 with retrospective effect from 1.6.1976, it is immaterial as to whether the services have been rendered outside India or the payee does not have a permanent establishment in India. In our view, there cannot be any issue about the insertion of this explanation. However, the assessment year before us is 2003-04 and this explanation came only in the year 2010. In these circumstances only, we hold that once the assessee had made all these payments, finalized accounts well before insertion of the explanation, it is not supposed to take the clock back and deduct TDS. We disagree with the Revenue s ground on this reasoning. So far as the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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