TMI Blog2018 (7) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... AMARJIT SINGH, ACCOUNTANT MEMBER For The Revenue : Shri V.K. Singh, Sr.DR For The Assessee : Shri M.J. Shah, AR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-4, Vadodara dated 4.11.2016 passed for the assessment year 2013-14. 2. Though Revenue has taken three grounds of appeal, but its grievance revolves around a single issue viz. the ld.CIT(A) has erred in deleting disallowance of ₹ 1,05,98,558/- made by the AO. 3. Brief facts of the case are that the assessee-company at the relevant time was engaged in manufacturing of steel billets and related products at its factory located at Kalol, Dist. Panch Mahals. It filed its return of income electronically on 23.9.2013 declaring income at NIL. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee had claimed expenditure of commission payment of ₹ 1,05,98,558/- in foreign currency. The ld.AO has confronted the assessee to show as to whether it has deducted TDS on such comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn Agents had done the services in their countries and received commission payments for the services rendered by them in their countries for getting orders to the appellant. The operation of the Section 195 of the Income-tax Act comes into force for deducting TDS on foreign payments paid by the resident assessee to non-resident agents only when the payment made to the non-residents. Various court decisions have held that in such type of situations, the provisions of deducting tax will not arise as the overseas commission income of a foreign agent is not taxable in India in the absence of 'business connection. A commission agent working outside India for obtaining export orders does not carry out any business operation in India and, therefore, no income is stated to accrue or arise in India. The CBDT Circulars clarifying this provision have been withdrawn but it has not changed the fundamental principles. If the commission agent acting as a selling agent outside India is not chargeable to tax in India and the receipt in India of the sale proceeds remitted by the purchasers from abroad did not amount to an operation carried out by the non-resident commission agent in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in earlier years i.e. for A.Y. 2001-02, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 2009-10 and 2011-12 vide orders dated 18.09.2009, 28.01.2010, 21.01.2013, 29.11.2013 and 15.02.2016 respectively. From the copies of orders placed before me it transpires that this contention of the Authorized Representatives is correct. Three different ClT(A) have allowed appeals of the assessee for A.Y. 2001-02, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. I also agree with the Ld. Authorized Representative that Hon'ble ITAT, Ahmedabad vide its order dated 20.08.2010 for A.Y. 2002-03 and 2007-08 in ITA No. 1443 and 1444/Ahd/2010 have dismissed the appeals of the revenue. Similarly, vide order dated 13.07.2012 Tribunal has dismissed the appeals of revenue for A.Y. 2001-02, 2003-04, 2004-05, 2005-06 and 2006-07 in ITA No 5- 14/Ahd/2010. Considering the various judicial precedents as mentioned above, the Assessing Officer is not justified in disallowing the commission payments made abroad on the ground that no IDS was deducted. In view of the various case laws mentioned supra and respectfully following them, I am of the considered view that the claim of the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gy Centre P. Ltd. v. CIT [2010] 327 ITR 456 (SC) was made. Apart from consistency, we would like to make reference to the facts noted in the head notes of the judgment of Welspun Corporation Ltd. (supra), which reads as under: The assessee-company was a global manufacturer of steel pipes, plates and coils, offering the highest quality of pipes. The manufacturing activities performed by the company were highly technical in nature. The manufacturing of specialised pipe was a highly technical activity involving a highly-technical complex exercise of technology and skilled labour and the finest grade of raw materials. To procure orders, the company required specialist agents who could understand the technical nitty-gritty of the assessee's business and could demonstrate the assessee's business profile and the quality of the products of the assessee to the potential clients to convince them to enter into a contract with the assessee for supply of the pipes etc. and other allied works. In order to perform the aforesaid highly technical activity, the assessee entered into a contract with foreign agents. In terms of the agreement, the agent was to develop, expand and prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns in India, no fault can be found in not deducting tax at source from these payments or, for that purpose, even not approaching the Assessing Officer for order under section 195. In our considered view, the assessee, for the detailed reasons set our above, did not have tax withholding liability from these payments. As held by Hon'ble Supreme Court in the case of GE India Technology Centre (P.) Ltd. v. CIT [20101 327 ITR 456/193 Taxman 234/7 tax.mann.com 18, payer is bound to withhold tax from the foreign remittance only if the sum paid is assessable to tax in India. The assessee cannot, therefore, be faulted for not approaching the Assessing Officer under section 195 either. As regards the withdrawal of the CBDT circular holding that the commission payments to non-resident agents are not taxable in India, nothing really turns on the circular, as de hors the aforesaid circular, we have adjudicated upon the taxability of the commission agent's income in India in terms of the provisions of the Income Tax Act as also the relevant tax treaty provisions. 7. The facts in both the case are identical. Both the assesses were engaged in manufacturing of steel billets, wire rods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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