TMI Blog2019 (1) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... l settled principle of law flowing from the judgment passed in the case of CIT vs. Toshoku Ltd., [1980 (8) TMI 2 - SUPREME COURT] that the non-resident since rendering services outside India, the commission earned by such non-resident for acting as an agent for Indian exporter would not accrue in India. In the case in hand the foreign agents are not residents of India and thus squarely covered by the said judgment passed by the Hon’ble Apex Court. Further that similar commission paid in earlier years by the assessee to the foreign agents in the similar set of facts and circumstances no disallowance made by the authorities below and therefore disallowance made by the Learned AO is not justified. In fact the order impugned clarified each and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The instant appeal filed by the revenue before us is against the order dated 01.09.2015 passed by the Commissioner of Income Tax (Appeals)-7, Ahmedabad [Ld. CIT(A) in short] for Assessment Year (AY) 2012-13 arising out of the order u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 30.01.2015 passed by the DCIT, Circle 2(1)(2), Ahmedabad with the following grounds: 1. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance made on account of commission paid to foreign agents u/s. 40(a)(i) of the Act amounting to ₹ 43,57,703/-, without properly appreciating the facts of the case and the material brought on record. 2. The Ld.CIT(A) has erred in law and on facts in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion Expenses upon which on 22.11.2014 the ledger account for commission expenses for the year under consideration was furnished perusal of which further revealed that the assessee has paid commission amounting to ₹ 43,57,703/- to the non-resident foreign agents without deducting the tax at source and therefore, by and under letter dated 24.12.2014 a show-cause was issued to the assessee as to why such commission paid to the non-resident foreign agents should not be disallowed invoking the provision of Section 195 of the Act. 4. In response to the said show-cause the assessee submitted that the provision of Section 195 of the Act does not apply in the instant case since the amount paid to the non-resident is not chargeable under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act from the payment made to non-resident agents towards services rendered by them. Such expenditure to the tune of ₹ 43,57,703/- claimed under the head commission expenses paid to such nonresident was thus disallowed and added back to the income u/s 40(a)(ia) of the Act against which appeal was preferred before the Learned CIT(A) who in turn deleted such addition made by the AO. Hence, the instant appeal before us. 5. At the time of hearing of the appeal, Learned Counsel appearing for the assessee submitted before us that the non-resident agents did not receive the commission in India and therefore the income do not fall under the category where TDS is liable to be deducted on such commission paid to the foreign agents. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2 of Section 9(vii) as the commission payment is not for rendering any managerial, technical or consultancy services. It is well settled principle of law flowing from the judgment passed by the Hon ble Supreme Court in the case of CIT vs. Toshoku Ltd., 125 ITR 525 that the non-resident since rendering services outside India, the commission earned by such non-resident for acting as an agent for Indian exporter would not accrue in India. In the case in hand the foreign agents are not residents of India and thus squarely covered by the said judgment passed by the Hon ble Apex Court. Further that similar commission paid in earlier years by the assessee to the foreign agents in the similar set of facts and circumstances no disallowance made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave perused the relevant materials available on record. It appears from the record that out of the sale consideration on sale of immovable property, ₹ 8 crores have been invested directly in the capital of Partnership Firm. Further that additional deposit from Directors has also been invested in the capital. During the year, cash accruals from the operations of the company aggregated to ₹ 12.54 crores has also been utilized for additional investment in the Partnership Firm during the year under consideration. Ultimately, no part of interest bearing funds have been utilized for this purpose and therefore the amount of interest is eligible under Rule 8D(ii) is NIL. It seems that no direct or indirect expenditure has been incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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