TMI Blog2015 (10) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by non-residents, who have no permanent establishment in India or have any business connection in India, by virtue of which the payment of commission accrued or arose in India then, it is exempted, if the assessee is able to prove that the services were rendered by those non-residents at abroad. In the present case, the assessee has not established the facts on record that the non-resident has rendered services at abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or correspondence took between the parties. Without examining these details, we are not in a position to decide the nature of services rendered by the non-resident agent. Therefore, it is appropriate to remit the entire issue back to the file of the AO with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad. Accordingly, the entire issue is remitted back to the file of the AO for fresh consideration and the AO is directed to make necessary enquiry regarding the nature of services rendered by the non-resident agent and the payments made thereof. - Decided in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made to M/s. Tarun of Anvil Corp. USA under section 195 read with section 9. 3.2. The ld. AR submitted that the Commissioner of Incometax erred in his finding that the expenditure by way of payment of commission to M/s. Tarun of Anvil Corp. USA had been allowed without verification of its deductibility while passing the assessment order and the Commissioner of Income-tax failed to note that the Assessing Officer had issued a questionnaire through her letter dated 25-10-2012 in which she had specifically called for explanation from the assessee as to why tax was not deducted at source on overseas commission payment of ₹ 54,93,841. The ld. AR further submitted that the Commissioner of Income-tax also failed to note that in the said letter dated 25- 10-2012 the assessee had been called upon to produce the agreements, terms and conditions agreed upon with the overseas client(s) and also as to how the assessee had arrived at the income from exchange rate fluctuation. According to the assessee s Counsel, the Commissioner of Income-tax further failed to note that in the said letter dated 25-10-2012, the Assessing Officer had specifically called upon the assessee to stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous and prejudicial to the interests of Revenue. Further, the ld. AR pointed out that CIT has not discussed the various judicial decisions brought to his notice and relied on by the assessee through written submissions in reply to the show cause notice, before concluding that the order passed by the Assessing Officer was erroneous, and prejudicial to the interests of Revenue. Therefore, he submitted that the Commissioner of Income-tax ought to have discussed the judicial decisions relied on by the assessee and given a finding as to why those judicial decisions were not relevant to the facts and circumstances of the assessee 's case before concluding that the order passed by the Assessing Officer was erroneous, and prejudicial to the interests of Revenue. 3.5. Further, the ld. AR relied on the order of the Tribunal, Chennai Bench in the case of Shri S. Rajagopal v. ITO in ITA No.1647/Mds/2014 dated 27th March, 2015, wherein the Tribunal observed that the order passed by the Assessing Officer becomes erroneous and prejudicial to the interests of the Revenue under sec.263 in the following cases: (i) The order sought to be revised contains error of reasoning or of law or of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order u/s.143(3) of the Act on 27.3.2013 and on the basis of the order of the ITO, Ward-I(1), Coimbatore dated 6.3.2013, the Assessing Officer came to the conclusion that the assessee is not liable for deduction of TDS in respect of payment of commission to M/s. Tarun Anvil Corporation, USA and he has not carried out any independent enquiry. The order of the ITO, Coimbatore has no basis on which he came to the conclusion that the payment made to M/s. Tarun Anvil Corporation, is not liable for TDS. Being so, the CIT assumed jurisdiction u/s.263 of the Act, to see whether the payment made to M/s. Tarun Anvil Corporation, USA is liable for TDS or not. The assessee has not placed any information regarding the nature of services rendered by the non-resident agent and he has not also produced purchase orders along with correspondence with the nonresident agent and hence, it is incumbent upon the Assessing Officer to examine all the factors relating to services rendered and the payment of remuneration to the non-resident agent. If there is no deduction of TDS in respect of payment made, which is chargeable under the Act, then, the expenditure claimed by the assessee cannot be allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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