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2015 (9) TMI 602 - ITAT AHMEDABAD

2015 (9) TMI 602 - ITAT AHMEDABAD - TMI - Disallowance made on account of commission payment to non-resident - as per AO assessee has not paid the actual payment within the prescribed period of 12 months framed u/s 139(1) of the Act the whole expenses claimed by the assessee is not justified and hence not allowable u/s 195 - CIT(A) deleted the addition - Held that:- From going through section 139(1), there is no such provision mentioned in which some time prescribed period of 12 months is requir .....

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ion 195 sub-section (1) are not correct and nor as discussed above, we do not find any error in the findings recorded by the CIT(A). We uphold the same. - Decided against revenue. - ITA No.432/Ahd/2012 - Dated:- 28-8-2015 - Shri Rajpal Yadav and Manish Borad, JJ. For The Appellant : Shri D. C. Mishra, Sr. DR For The Respondent : Shri S. N. Divetia, AR ORDER PER Manish Borad, Accountant Member. This is an appeal filed by the Revenue against the order of CIT(A) dated 5.12.2011 which has been passe .....

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de on account of commission payment to non-resident without verifying the services rendered by the non-resident and also without considering the remand report furnished by the A.O. (2) On the facts and circumstances of the case, the ld. CIT(A) ought to have upheld the order of the Assessing Officer. (3) It is, therefore, prayed that the order of the ld. CIT(A) may be set aside and that the order of the Assessing Officer be restored to the above extent. 3. Brief facts of the case are that notice .....

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of 12 months framed under section 139(1) of the Act, hence it is not justified and not allowable u/s 195 of the I. T. Act and should be added in the total income of the assessee firm. Aggrieved, the assessee went in appeal before CIT(A) who deleted the disallowance made by the A.O. under section 195 of the Act by giving following observations :- 2.1 I have carefully considered the submission of the ld. counsel and the facts of the case. I have also considered the remand report of the Assessing O .....

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specific issue. No such provisions for payments of commission within a period of 12 months were noticed either u/s 139(1) or u/s 195 of the Act. Thus, there is no substance in the finding given by the assessing officer in pra -4 of the assessment order and the same is rejected. 2.3 There is no dispute about the earning of commission by a nonresident, a Dubai based concern named 7Secure Technologies LLC, and subsequent payment thereof in dollars through Bank of India. The concern 7Secure Technolo .....

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by the Supreme Court in GE India Technologies Centre (P) Ltd. vs. CIT 327 ITR 456 (SC). In the said case the expression any other sum chargeable under the provisions of the Act in section 195 of the Act was elucidated and explained. It was held that if payment is made in respect of the amount which is not chargeable to tax under the provisions of the Act, tax at source (TDS) is not liable to be deducted. There is no finding of the Assessing Officer that the commission payment of ₹ 11,42,0 .....

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onsidered along with the CBDT Circular No.23 dated 23.07.1969 and Circular No.786 dated 07.02.2000 and the appeal of the Revenue was dismissed. The facts of the aforesaid case are exactly similar to that of the appellant firm. In view of the above discussion, it is held that the appellant was not liable to deduct tax at source (TDS) for the commission credited to the account of 7 Secure Technologies LLC, Dubai. The disallowance so made u/s 195 of the Act is thus deleted. 4. Aggrieved, Revenue ha .....

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8377; 11,42,000 which was payable to a non-resident party, viz., 7 Secure Technologies LLC of Dubai. Therefore, notice was issued on 16.12.2010 by AO stating that though the said party had not earned income in India and it was not chargeable under the Act, but since it was credited to commission a/c in the books, its genuineness was required to be proved and audit certificate u/s 195(6) should be produced. The appellant by letter dated 16.12.2010 stated that the commission of US $28560 was payab .....

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rm No.15CB to prove the commission expenses. The appellant also letter dated 21.12.2020 has furnished the confirmation letter dated 1.12.2010 received from the said party and it was also explained with evidence that due to the financial crisis the payment could not be made in time. However, the AO has rejected the aforesaid explanation and evidences without any speaking order and simply stating that since the payment was not made within the prescribed period u/s 139 it was not admissible. 2.2 Th .....

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5CA and 15CB submitted as per Sec.195. The relevant documents are enclosed in the paper book. Thus the aforesaid evidence clearly show that the impugned commn. Was paid to the foreign agent for the services rendered outside India. 2) Secondly, though the AO has not referred to sec.195 rws 40(a)(i) for making disallowance, even the same are not attracted. The section 195 very clearly speaks that unless the income is liable to be taxed in India, there is no obligation to deduct tax. Now sec.9 is t .....

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India thru banking channel. This view is fortified by the decision by the decision of Apex ourt in the case of Toshioku Ltd. (125 ITR 525). Recently, in case of Vijay ship Breaking Corpn. (314 ITR 309) (SC) held that the resident is not required to deduct TDS u/s 195(1) if the income of non-resident recipient is not taxable in India. The case law on this subject was considered by Delhi Bench of ITAT in DCIT vs. Divi s Laboratories Ltd. (131 ITD 271). In view of the aforesaid binding precedents .....

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of ₹ 11,42,000/- on the basis of his finding that assessee has not paid the actual payment within the prescribed period of 12 months framed u/s 139(1) of the Act the whole expenses claimed by the assessee is not justified and hence not allowable u/s 195 of the Act. Section 139(1) reads as under :- (1) Every person - (a) Being a company (or a firm) or (b) Being a person other than a company (or a firm) if his total income or the total income of any other person in respect of which he is as .....

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rea as may be specified by the Board in this behalf by notification in the Official Gazette, and who (during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or) at any time during the previous year fulfills any one of the following conditions, namely- (i) Is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership tenancy or otherwise, as may be specified by the Board in this behalf; or (ii) I .....

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