TMI Blog2015 (10) TMI 2786X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Transmission Corporation of A.P. Ltd.'s [1999 (8) TMI 2 - SUPREME COURT] relied upon by the learned standing counsel for the Revenue is not applicable to the facts of the present case. We find no infirmity in the order of the Tribunal in confirming the order of the Commissioner of Income-tax (Appeals).' - Decided against revenue. - ITA No.315/RJT/2013 - - - Dated:- 8-10-2015 - Pramod Kumar AM and Rajpal Yadav JM Yogesh Pandey for the appellant D.M. Rindani for the respondent ORDER Pramod Kumar AM: 1. By way of this appeal, the Assessing Officer has challenged correctness of the order dated 29th May, 2013 passed by the ld. CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act, 1961 ( the Act hereinafter) for assessment year 2010-11, on the following grounds :- (i) The CIT(A) has erred in law and facts in not considering the provisions of section 40(a)(ia) of the Act and deleted the addition of ₹ 54,32,213/- payment made for rendering of any managerial or consultancy service rendered by non resident agent without TDS u/s. 40(a)(ia) of the Act. (ii) On the facts and circumstances of case, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the position that the assessee s failure to move application under section 195(2) of the Act would also lead to inference that the assessee has failed to comply with the statutory obligation and disallowance under section 40(a)(i) would, therefore, be justified. It was in the backdrop of these finding and after elaborate discussions about the taxability of the income and commission payment in India that the Assessing Officer concluded that the payments aggregating to ₹ 56,89,251/- made to the overseas agents are liable to be disallowed under section 40(a)(i) since the assessee did not deduct tax at source under section 195 of the Act. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A). Ld. CIT(A) was of the view that the provisions of section 5, section 9, section 195 and section 40(a)(i) could only come to play in cases where the income of the non-resident overseas agent accrues or arises in India but since these agents did not have any permanent establishment in India nor did they carry any activity in India, such taxability will not come into play except in the case of Parikh Patel Company. So far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India ;... (vii) income by way of fees for technical services payable by- Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day April, 1976, and approved by the Central Government. Explanation 1.-For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date. Explanation 2.-For the purposes of this clause, 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the definition of fees for technical services. ** ** ** 9. The Explanation to section 9(2) of the Act was substituted by the Finance Act, 2010, with retrospective effect from June 1, 1976. The above said explanation would come into play only if the said amount paid would fall under the headings : (i) income by way of interest as set out in section 9(1)(v) of the Act ; or (ii) income by way of royalty as set out in section 9(1)(vi) of the Act ; or (iii) income by way of fees for technical services as set out in section 9(1)(vii) of the Act. 10. While dealing with section 9(1) of the Act, the Supreme Court in CIT v. Toshoku Ltd. [1980] 125 ITR 525, on considering a transaction where tobacco was exported to Japan and France and sold through non-resident assessees who were paid commission, held as under : 8. The second aspect of the same question is whether the commission amounts credited in the books of the statutory agent can be treated as incomes accrued, arisen, or deemed to have accrued or arisen in India to the non-resident assessees during the relevant year. This takes us to section 9 of the Act. It is urged that the commission amounts should be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred supra. In the instant case also the assessee engaged the services of non-resident agent to procure export orders and paid commission. That apart, the Commissioner of Income-tax (Appeals) as well as the Tribunal have correctly applied the principle laid down in GE India Technology Centre (P.) Ltd.'s case, referred to supra, to hold that the assessee is not liable to deduct tax at source when the non-resident agent provides services outside India on payment of commission. 12. In the light of the above said decisions and the finding rendered by us on the earlier issue that the services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services, we are the firm view that section 9 of the Act is not applicable to the case on hand and, consequently, section 195 of the Act does not come into play. In view of the above finding, the decision of the Supreme Court in Transmission Corporation of A.P. Ltd.'s case, referred to supra, relied upon by the learned standing counsel for the Revenue is not applicable to the facts of the present case. We find no in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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