TMI Blog2019 (1) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... g the disallowance out of the interest expenditure on account of advances given to unrelated party. Accordingly, ground number 1 of the appeal of the revenue is dismissed. Non-deduction of TDS u/s 195 - tds on commission payment to its foreign agent for rendering sales and marketing services abroad assessee had deducted TDS on part payment but not on balance payment - Held that:- Undisputedly the assessee has made commission payment to its foreign agent for rendering sales and marketing services abroad for the purposes of the products to be sold to the dairy development Board, Nepal. It is also undisputed that the foreign agents have rendered the services abroad and none of the agent has any fixed base in India. Therefore, it, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest. 2. Whether on the facts and circumstances of the case and in law, the ld CIT(A) erred in deleting the addition of ₹ 77110450/- made on account of non-deduction of TDS u/s 195 ignoring the fact that assessee had deducted TDS on part payment but not on balance payment. 3. Brief facts of the case shows that assessee is a company engaged in the business of production and trading of milk products. It filed its return of income on 13/10/2010 declaring income of ₹ 4539180/-. During the course of assessment proceedings two disallowances were made which are being contested in this appeal. The 1st disallowance is a sum of ₹ 420, 000/ being 12% interest of INR 3,500,000 advanced by the assessee to unrelated parties w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectively. The appellant had sufficient own funds in the bank account and therefore the appellant has paid interest on borrowed funds which were for the purpose of the business and the interest free advances given to the sister concern were not out of the interest-bearing funds. 5. The learned departmental representative vehemently submitted that the assessee has paid huge interest and therefore the amount of advance given to the sister concern free of interest has rightly been taken by the learned AO as diverse of interest-bearing funds. Therefore, the interest was disallowed. 6. The learned authorised representative reiterated the submissions made before the learned CIT A, which are covered in paragraph number 5.3 of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of rupees 77110450/ deleted by the learned CIT A, on account of commission paid to a foreign party without deduction of tax at source. The learned assessing officer noted that the assessee has paid commission of INR 1 0787684/ whereas, in the immediate preceding year it was only INR 20 411259/ . During the year. The total sale of the assessee has been shown at INR 14 11 803429/ whereas, in the immediately preceding year it was INR 12 08904752 and there is a 15.09% increase in turnover during the year, whereas in respect of commission expenses, it has increased by 347.83 percent. The AO noted that the assessee has paid INR 7 8532502, international business network private limited of Nepal. Out of the above payment assessee has deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no services were rendered by that party in India. He further held that in absence of any article of taxation of fees for technical services and the commission income in the double taxation avoidance agreement between the two countries. The above income can only be taxed under article 7 as business profits. He further held that to tax the business profit in India. The recipient of income should have a permanent establishment. He further held that the services have been provided in Nepal for the purpose of export sale of the appellant s product to Dairy development Corp Nepal. He therefore, deleted the above disallowance for that reason. 10. The learned departmental representative vehemently supported the order of the learned assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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