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M/s. Apsara Silks Versus The Income Tax Officer, International Taxation, Ward 1 (1) , Bengaluru

TDS u/s 195 - commission income earned by non-resident agents - applicability of DTAA - existence of PE in India - Held that:- In the present case, the non-resident commission agent is carrying out business outside India on behalf of resident assessee and therefore, in our considered opinion, this Explanation 2 to section 9(1) (i) is not applicable in the present case. - Examining the applicability of DTAA between India and various countries i.e., Qatar, South Africa, Spain, USA, Singapore a .....

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e brought to tax in India and as per section 90(2), if DTAA is more beneficial than the domestic laws, then DTAA has to prevail. - Thus commission payment made by the assessee to these commission agents outside India for procuring export orders cannot be brought to tax in India and as a consequence, TDS is not deductible - Decided in favour of assessee. - ITA Nos. 442 to 444/Bang/2015 - Dated:- 29-4-2016 - Shri A. K. Garodia, Accountant Member And Shri Vijay Pal Rao, Judicial Member For the .....

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-09 are as under:- 1. The order of the Commissioner of Income Tax (Appeals)- 12, Bengaluru is opposed to law and facts of the case. 2. The Hon'ble Commissioner of Income Tax (Appeals) ought to have held that the provisions of Section 201(1) & 201(1A) are not applicable in the facts and circumstances of the case. 3. The Hon'ble Commissioner of Income Tax (Appeals) ought to have held that there was no statutory obligation on the appellant to deduct tax on the commission paid to the non .....

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ncome Tax (Appeals) was bound by the circulars issued by the Central Board of Direct Taxes as regards the interpretation of Section 195 to the effect that when the payment is made to a non resident having no permanent establishment in India the provisions of Section 195 is not applicable. 7. The appellant craves for leave to add to, delete from or amend the ground of appeal. 3. The grounds raised in the remaining two appeals are identical and therefore, for the sake of brevity, these grounds are .....

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tion 9(1) (i) is not applicable in the present case. He also submitted that in the present case, the submissions made by the assessee before the ld. CIT(Appeals) are available on pages 13 to 18 of the Paperbook and as per the same, it could be seen that it is the submission of the assessee before the CIT(A) that even if the payment to the non-resident is liable to incidence of tax under the provisions of the Act and in the event of contrary provisions in the DTAA, then the said provisions of DTA .....

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e shall be chargeable only in that State, unless the enterprise carries on business in other contracting State through a Permanent Establishment (PE) situated therein. It was further submitted that it is nobody s case that the agents to whom commission was paid were having PE in India. It was also submitted that the relevant provisions of DTAA between India and Republic of South Africa are available at pages 40 to 61 of PB; between India and Kingdom of Spain at pages 62 to 87 of PB; between Indi .....

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o decisions of AAR, it was submitted that the facts in those cases are different and therefore, these Rulings of AAR are not applicable to the present case. In particular, the ld. AR of assessee drew our attention to page 6 of Written Submissions being reproduction of Ruling of AAR in the case of Rajiv Malhotra, 284 ITR 564 (AAR) and he pointed out that in this order, AAR has referred to its own another Ruling in Ind. Telesoft P. Ltd., 267 ITR 725 (AAR) and it is stated that in that case, agents .....

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ng of AAR is in favour of assessee. It was submitted that the ld. CIT (Appeals) was not justified in following the Ruling of AAR in the case of Rajiv Malhotra (supra) and not following the Ruling in the case of Ind. Telesoft P. Ltd. (supra). 6. Regarding another Ruling of AAR rendered in the case of SKF. Boilers & Driers (P.) Ltd., 345 ITR 385 (AAR), the ld. AR of assessee submitted that in that case, benefit under the provisions of DTAA was not claimed by the assessee, whereas in the presen .....

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