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2016 (8) TMI 1082 - ITAT AHMEDABAD

2016 (8) TMI 1082 - ITAT AHMEDABAD - TMI - TDS u/s 195 - Payment of commission to the foreign agents - Held that:- Once, the genuineness of the expenditure has been accepted in earlier years, the payment of commission to the same parities cannot be considered as incurred for non-business purposes. Further, the commission have been paid to the non-resident who do not have any Permanent Establishment in India and, therefore, not liable to tax in India. Therefore, the provisions of Section 195 also .....

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R: 1. ITA Nos. 1708/Ahd/2012 & 178/Ahd/2016 are appeals by the Revenue preferred against two separate orders of the Ld. CIT(A)- Valsad dated 23.05.2012 pertaining to A.Y. 2009-10 and dated 24.11.2015 pertaining to A.Y. 2012-13. 2. In both these appeals, the grievance of the revenue is the same and, therefore, both these appeals were heard together and are being disposed of by this common order for the sake of convenience. The grievance of the revenue relates to the deletion of the addition m .....

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the foreign agent Amount .of commission 1 KHS Synchemica Corpo, Taiwan 1,04,066 2 P T Narda Tita, Jakarta 56,676 3 Woo-Shin Medics Co., Korea 5,50,798 4 Slectcchemie Imp. Exp.E.Repres.Ltda, Zurich 77,604 5 Representaciones Gafel, 43,255 6 Ramasey Veternity, Egypt 2,19,444 7 Roquette S.A., Republic of Seychelles 58,62,925 Total 69,14,768 For A.Y. 2012-13 S.No. Name of the foreign agent Amount of commission 1 Woo-Shin Medics Co. Ltd., Korea 8,06,381 2 Pharmavet International Ltd, Israel 9,726 3 Ra .....

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to bring necessary material on record as to how the foreign agents corresponded with the assessee company regarding the requirement of material and other things for foreign buyer and accordingly placed procurement order on Assessee Company on behalf of foreign company. 7. On the basis of the above observations, the A.O. was of the opinion that the export commission was for non-business purposes and accordingly disallowed the same. 8. The A.O. further strengthened his view by invoking the provis .....

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entions of the appellant as well as the observation of the AO in the assessment order. There is no plausible reason to even doubt the genuineness of the commission paid to the seven foreign agents as the appellant has filed sufficient documentary evidences and expenditure on this front is inevitable and has been incurred year after year. Since the commission has been paid to these foreign agents through banking channel, their identity are proved and confirmations have been obtained from them, I .....

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eemed to accrue or arise in India only if any part of income is reasonably attributable to operation carried out by the non-resident in India and if no operation is carried out in India by the non-resident, there would be no income deemed to accrue or arise in India. Under this factual and legal position, no tax is deductible from the payment made and hence, the provisions of Section 40(a)(ia) are not applicable with regard to the captioned payments to non-resident. Since the appellant has filed .....

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he ld. CIT(A) observed a under:- 6. Decision: I have carefully considered the facts and law stated by the assessing officer in the assessment order as well as the written submissions made by the A.R. of the appellant during the appellate proceedings. As this issue also arose before my predecessor in appellant's own case for A.Y. 2009-10 and 2010-11 which was decided in appellant's favour. For the A.Y.2011-12 I also decided the issues by following the decision of my predecessor's deci .....

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le reason to even doubt the genuineness of the commission paid to the seven foreign agents as the appellant has filed sufficient documentary evidences and expenditure on this front is inevitable and has been incurred year after year. Since the commission has been paid to these foreign agents through banking channel, their identity are proved and confirmations have been obtained from them, I am inclined to accept the said expense as a genuine business expenditure. Secondly I find that nothing has .....

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non-resident in India and if no operation is carried out in India by the non-resident, there would be no income deemed to accrue or arise in India. Under this factual and legal position, no tax is deductible from the payment made and hence, the provisions of section 40(a)(ia) are not applicable with regard to the captioned payments to non-resident. Since the appellant has filed sufficient material including confirmation that the seven foreign agents are non- residents in India and they have neit .....

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