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TMI Blog2017 (5) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... of export orders. This included an entity by the name and style of M/s.Textile Services Limited, based in New Delhi to which an amount of Rs. 17,84,293/- was paid and claimed as expenditure in the computation of income for the purposes of the Income tax Act 1961 (in short Act ). When the return of income was taken up for scrutiny, the assessing officer was of the view that tax ought to have been deducted from the commission payment in view of the mandate in section 40(a)(i) of the Act, in the absence of which, the expenditure claimed was liable to be disallowed and added back to the taxable income. The appellant submitted that the payments of commission were, in all cases except Textile Services, made to entities situated outside India, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed the disallowance since according to her, the transaction would come within the sweep of 40(a) of the Act. Reliance on the Circular was negatived on the ground that the payment in the instant case had been made to an Indian recipient. 4. In further appeal before the Income Tax Appellate Tribunal ( Tribunal ), the thrust of the appellants submission was that the payment of commission was for the rendition of services outside India and that accordingly the same would not be liable to tax. The tribunal considered the transaction in the light of the circular issued by the CBDT dated 7.2.2000, and the facts as found by the lower authorities and dismissed the appeal as against which the present appeal is filed at the instance of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular No.23, dated 23rd July, 1969, is drawn, where the taxability of Foreign Agents of Indian Exporters was considered along with certain other specific situations. It had been clarified then that where the non-resident agent operates outside the country, no part of his income arises in India. Further, since the payment is usually remitted directly abroad it cannot be held to have been received by or on behalf of the agent in India. Such payments were therefore held to be not taxable in India. The relevant sections, namely, section 5(2) and section 9 of the Income Tax Act, 1961, not having undergone any change in this regard, the clarification in Circular No.23 still prevails. No tax is therefore deductible under section 195 and consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of this Act (not being income chargeable under the head salaries shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. " 10. The liability to deduction of tax at source is in terms of section 40(a)(i) of the Act. The argument of the learned counsel as well as the substantial question of law sought to be raised appear to be a clever afterthought, particularly since this argument was not raised either at time of assessment or first appeal but for the first time before the Tribunal even though all earlier orders were passed after the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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