TMI Blog2014 (4) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... on 40(a)(ia) read with section 195(2) was incorrect. The findings of the authorities below are hereby reversed and this ground of appeal of assessee is allowed. - Decided in favour of assessee - ITA No. 2890/Ahd/2010 - - - Dated:- 29-4-2014 - Mukul Kr. Shrawat (Judicial Member) And Anil Chaturvedi (Accountant Member) For the Petitioner : K. C. Matthews (Sr. DR) For the Respondent : Urvashi Shodhan (AR) ORDER Mukul Kr. Shrawat (Judicial Member) This is an appeal filed by the assessee arising from the order of the CIT(A)-XVI, Ahmedabad dated 23.10.2010. 2. Ground no. 1 of the appeal is reproduced below: Learned CIT(A) has erred in law and on facts in confirming disallowance of ₹ 8,13,456/ commission p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, since Circular No. 786 dated 07.02.2000, photo copy of same is enclosed herewith for your reference, clarifies allow ability of such expenditure even if TDS is not made as provided under S. 195 of the Act. Our this agent has been paid such commission since F.Y. 2004-05 and till F.Y. 2008-09 every year. Since A.Y. 2001-02 to A.Y. 2007-08, all the cases have been selected for scrutiny and this commission payment is examined and found correct. 3.1 The Assessing Officer has noted that the circular as intimated was withdrawn in the month of November 2009. He has held that the provisions of section 195 were applicable on the payment of commission and since no tax was deducted, therefore Assessing Officer had invoked the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, since the CBDT circular was withdrawn before the completion of the assessment, therefore, the benefit granted in the said circular could not be allowed. The Ld. AR has further drawn our attention on observation of the Assessing Officer that at the time of assessment, rest of the queries were complied with but the disallowance was made merely assigning the reason that the said CBDT circular was withdrawn. Now before us, CBDT circular no. 786 [F No. 500/108/98-FTD] dated 07.02.2000 [Withdrawn by Circular No. 7/2009 [F. No. 500/135/2007-FTD-I] dated 22.10.2009 is placed on record. This circular was in respect of section 9 of I.T. Act to clarify regarding the taxability of export commission payable to a non-resident agent fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced in the case of GE India Technology Centre (P) Ltd. 327 ITR 456 (SC). In these cases, it was held that a person paying interest or any other sum to a non resident is liable to deduct tax u/s 195 only if such sum is chargeable to tax in India and not otherwise. Application to deduct tax at source u/s 196 is attracted only when the payment is chargeable to tax in India. In a situation when the IT authorities have accepted that the non-resident recipient is not liable to pay any tax in India, the assessee payer held as not liable to deduct tax at source u/s 195 of I.T. Act to the said non-resident company. Our attention has also been drawn on a decision of ITAT, Lucknow Bench pronounced in the case of DCIT Vs. Sanjiv Gupta (2012) 19 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circulars. In light of the judgments of the Supreme Court in CIT Vs. Eli Lilly Co. (India) (P.) Ltd., [2009] 312 ITR 225/178 taxman 505, 234/7 taxmann.com 18(SC), once the income was not exigible or chargeable to tax, TDS was not required to be deducted. Money paid to the third parties, who did not have any office or permanent establishment in India, was exempt and not chargeable to tax. Thus, on the said payments or income, TDS was not required to be deducted. It is also not that the payments were made prior to circular o. 7/2009. On this aspect, there is no dispute. Therefore, there is no reason to interfere with the order passed by the Tribunal deleting the addition made by the Assessing Officer under Section 40(a)(i). Respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e account of each party was furnished. In respect of freight and shipment charges, the assessee had confessed that these charges were through oversight TDS remained to be deducted, and therefore, offered the amount of disallowance. However, we have noted as also informed by both the parties, this ground of the assessee s appeal was not adjudicated upon by the Ld. CIT(A). Since the Ld. CIT(A) had inadvertently could not decide this ground, therefore we do not have the benefit to peruse the same, hence in the interest of natural justice, we hereby restore this ground back to the stage of Ld. CIT(A) to be decided de novo on merits, needless to say, after providing adequate opportunity of hearing to both the parties. Since, this ground is reman ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
