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TMI Blog2018 (7) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 and the same reads as under: "2. The learned CIT(A) erred in confirming the disallowance made u/s.40(a)(ia) in respect of commission and brokerage expenses paid to Mr. Mohd. Iqbal, resident of Oman on the ground that the assessee had failed to deduct TDS in respect of the said payment. 2.1 The learned CIT(A) failed to appreciate that the assessee was not liable to deduct tax u/s.195 in respect of the payment of commission made to a non resident in Oman for in services rendered outside India and hence, the disallowance u/s.40(a)(ia) was not justified on the facts of the case. 2.2 The learned CIT(A) ought to have appreciated that the commission paid by the assessee to the non-resident individual was not taxable in India and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x was deducted on the payment of commission to Mohd. Iqbal. The ld. AR further submitted that Commissioner of Income Tax (Appeals) primarily rejected assessee's plea on the ground that CBDT circular of 1969 was withdrawn on 22nd October, 2009 vide circular No.7/2009. After withdrawal of circular, assessee was required to deducted tax at source on the payment made to non-resident. The ld. AR pointed that even after withdrawal of circular No. 23 dated 23.07.1969, the various Benches of Tribunal have held that commission paid to non-residents for rendering services abroad where such non-residents has no permanent establishment in India, no TDS is to be deducted on payment of commission to such non- resident. In support of his submissions, ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance are wholly or partially taxable in India. If, tax is not assessable, there is no question of tax at source being deducted. 9. The Lucknow Bench of Tribunal in the case of ACIT Vs. S.K. International (supra.) held that where assessee paid commission on sales to foreign nationals for procuring orders from customers outside country, TDS was not required to be deducted on said payment. The relevant extract of findings of the Tribunal read as under: "6. Now, we examine other contentions raised by the Revenue in its grounds. In ground No.6, the Revenue has raised the issue regarding applicability of the explanation in sub section (2) of section 9 inserted by Finance Act, 2010 with effect from 01/06/96. We have considered this explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 786 dated 07/02/2000is this much only that now Indian exporters making payments to agents outside India will need to examine whether such an agent is liable to tax in India and follow the procedure as prescribed in the provisions of the Act. Since in the present case, it is not shown by the Revenue that the non-resident commission agents have rendered services in India or have received the payment in India without the help of Circular No. 786 dated 07/02/2000,income is not taxable in India in the hands of those nonresident commission agents and therefore, TDS was not required to be deducted and as a consequence, no disallowance can be made u/s 40(a)(i) in respect of those payments. 8. The CIT(A) has decided the issue by following variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 07/02/2000 was withdrawn, it comes out that in the facts of the present case, no TDS was required to be deducted because as per this circular in the case of payment of commission to foreign agents, nothing was required to be seen and examined and it could be concluded that no TDS was required to be deducted. Now in the absence of this circular, such decision has to be taken after examining these aspects as to whether the services were rendered in India or outside India and whether the payment was made in India or outside etc. Since, in the present case, this is not a case of the revenue that the services were rendered in India or the payment was made in India and the incomes in the hands of the non resident agent can be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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