TMI Blog2019 (8) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... he following grounds:- 1. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of ₹ 97,41,665/- made by the AO on account of export commission paid to foreign parties u/s 40(a)(ia) of the Income Tax Act, 1961 due to non-deduction of TDS as per provisions of section 195 . 2. On the facts and in the circumstances of the case, the Ld. C1T(A) failed in establishing as to how the cases of SKF Boilers Driers of AAR and Rajiv Malhotra, mentioned in the assessment order are not applicable in the case of assessee as the reasons given for doing so were not found to be cogent and convincing. Further, the Ld. CIT(A) has also failed to take note of the factum of withdrawal of Board s Circular No.7/2009 . 3. On the fact and in the circumstance of the case, the Ld C1T(A) has erred in relying upon the decisions in the case of AC1T, Circle-29(1), New Delhi Vs. Nidhi Exports in 1TA No.626/Del/2012 and Wellspring Universal Vs JC1T (2015) where the facts of the case were found to be different . 4. The Ld. C1T(A) has failed to appreciate the import of section 9 which lays do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The Ld. DR further submitted that the CIT(A) failed to appreciate the import of section 9 which lays down that any income of non-resident shall be deemed to accrue and arose in India whose source of income is in India as is in the instant case. 5. The Ld. AR relied upon the order of the CIT(A) and further submitted that the CIT(A) categorically mentioned that the foreign agents were resident of India and they rendered services outside India. The CIT(A) further observed that the commission was paid on the basis of order secured through them and they did not have any PE in India and have no business connection in any way in India, they were independently carrying on the business outside India, commission received from the assessee firm was their profit which ws taxable as per DTAA with India and France and UAE, no part of their income arise in India. The Ld. AR further submitted that the Ld. CIT(A) has rightly relied on the case of SKF Boilers and Driers Pvt. Ltd. and in the case of Rajeev Malhotra. 6. We have heard both the parties and perused all the material available on record. The CIT(A) has held as follows : 4.1 Perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for invoking Section 9(1)(i), existence of business connection/Permanent Establishment is a sine qua non and inevitable. It also appears that in the aforesaid ruling, the earlier ruling of the Hon'ble AAR in the case of Spahi Projects, 315 ITR 374 has not been considered and also the decision of the Hon ble Supreme Court in the case of CIT vs. Toshuku, 125 ITR 525 has also been not considered, and therefore the case of SKF Boilers and Driers P. Ltd. is to be treated as per incuriam. Therefore, the finding of the AO that right to receive commission arises in India when the order is executed by the person resident in India is not correct since the mere fact that payment is made by a person resident in India or the order is executed by a person resident in India does not result in establishment of business connection of the non-resident payee. It is further noticed that the ruling of the Hon'ble AAR in SKF Boilers is based on the ruling in the case of Rajiv Malhotra, [(2006) 284 ITR 564 (AAR)]. According to the Ld. Assessing Officer, the said decisions lay down that tax deduction was mandatory on export Commission since Commission was deemed to accrue or arise in India. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility to deduct TDS u/s. 195. 4.1.8 Regarding the applicability of provision of section 195 of the Act, again the Hon ble Court has referred the decision of Hon ble Supreme Court as under : 17. After referring to Eli Lilly Co. India (P.) Ltd. (Supra) in GE India Technology Centre (P) Ltd. (Supra), it has been held: 17. Section 195 appears in Chapter XVII which deals with collection and recovery. As held in CIT vs. Eli Lilly Co. (P.) Ltd. the provisions for deduction of TAS which is in chapter XVII dealing with collection of taxes and the charging provisions of the IT Act from one single integral, inseparable code and, therefore, the provisions relating to TDS applies only to those sums which are inseparable code and, therefore, the provisions relating to TDS applies only to those sums which are chargeable to tax under the IT Act. It is true that the judgment of Eli Lilly was confined to section 192 of the IT Act. However, there is some similarity between the two. If one looks at section 192 one finds that it imposes statutory obligation on the payer to deduct TAS when he pays any income chargeable under the head sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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