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TMI Blog2021 (10) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ous and unjust must be quashed with direction for relief. 2. Briefly stated facts of the case are that the assessee is an advocate by profession. The assessee filed return of income for the year under consideration on 29/09/2013, declaring total income of Rs. 1,28,82,248/-, which included income under the head 'profit and gains from business or profession', 'income from house property', 'income from capital gain', and 'income from other sources'. The return of income filed by the assessee was selected for scrutiny assessment. The Assessing Officer completed scrutiny assessment under section 143(3) of the Income-tax Act, 1961 (in short 'the Act') on 13/12/2015, after making certain additions/disallowances. On further appeal, the Learned CIT(A) allowed part relief to the assessee. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. Before us, the parties appeared through Video Conferencing facility and filed paper-book and other documents through email. 4. The ground No. (i) of the appeal relates to disallowance of electricity and water expenses, amounting to Rs. 26,303/-. The assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, however, submitted vouchers only of Rs. 170,000/- and, therefore, Assessing Officer made disallowance for the remaining amount of Rs. 67,000/- in view of lack of vouchers for those expenses. The Ld. CIT(A) also upheld the disallowance, observing as under: "6.3 The AO has made the disallowance of Rs. 67,000/- under this head since the appellant could not produce the voucher of such expenses. The appellant has submitted that all these payments were made through credit card and only some of the faded supporting bills were given which were not considered by the AO. The bills and vouchers were also submitted before me and it is found that the supporting bills of Rs. 67,000/- are not legible. As per the submission of the appellant the expenses are incurred over a period of 21 days whereas IBA Annual Conference & Exhibition was held from 30th September to 5th October, 20(sic) only. Hence, the period of stay of 21 days foreign visit cannot be held 'wholly and exclusively for the purpose of business. In this light, as the appellant has failed to give legible supporting evidence, the justification of expenses cannot be ascertained and disallowance of Rs. 67,000/- made by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. The relevant finding of the Learned CIT(A) is reproduced as under: "8.3 The AO has made the addition of Rs. 10,01,698/- on account of business promotion expenses out of which Rs. 10,01,698/- was made for overseas transaction. The AO has claimed that no TDS was deducted on this amount which was paid to International Bar Association. The submission of the appellant that International Bar Association does not have any business connection in India and the same payment is not taxable in India as per DTAA between' India and United Kingdom was not accepted by AO, as per the detailed discussion made in Para 8.1 Supra. The AO has treated that International Bar Association has permanent establishment (PE) in India through Bar Association of India and the income would be deemed to accrue or arise in India u/s. 9 of the Act Finally, the AO has treated that the payment made to IBA is related to the business connection in India and as appellant has failed to deduct TDS on this payment the same is disallowed. During the course of appellant proceedings, the appellant has filed a written submission and claimed that IBA has neither PE in India nor any business connection in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no Permanent Establishment or business connection of IBA in India. If there is no Permanent Establishment or business connection in India, the appellant has also failed how hosting of dinner and payment of Rs. 10,01,698/- is 'wholly and exclusively' related with the professional income of the appellant In this light, the submission of the appellant that the addition of Rs. 10,01,698 should be deleted does not deserve merit as the AO has rightly held that IBA operate through organizations across the world and Bar Association of India can be treated as PE in India. Alternatively, I also hold that if it has no PE, in India, such expenditure cannot be allowed under section 37(1) of the Act and cannot be held 'wholly and exclusively' for the purpose of earning the professional income of the appellant, In this light, the addition of Rs. 10,01,698/- is confirmed." 6.2. Before us, the learned Counsel of the assessee opposed existence of Permanent Establishment of IBA in India held by the Assessing Officer and Ld. CIT(A). According to him, the nonresident entity, i.e., International Tax Bar Association is neither having any business connection in India, nor having any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force:" 6.6. Further, section 195(2) has provided that, if payer considers that such sum is not chargeable in India in the hands of recipient (i.e. non-resident entity) then, the payer may make an application for non-deduction of tax as at source and then it will be decided whether how much of sum is chargeable in India. For ready reference, said provision is reproduced as under: "195 (2) Where the person responsible for paying any such sum chargeable under this Act (other than salary) to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application [in such form and manner to the Assessing Officer, to determine in such manner, as may be prescribed, the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of the sum which is so chargeable." 6.7. Thus, it is evident that if in view of the assessee this sum would not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry on other place of extraction of natural resources; (i) an installation or structure used for the exploration or exploitation of natural resources; (j) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale or machinery or equipment, continues for a period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery and equipment; (k) the furnishing of services including managerial services, other than those taxable under Article 13 (Royalties and fees for technical services), within a Contracting State by an enterprise through employees or other personnel, but only if: (i) activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelvemonth period; or (ii) services are performed within that State for an enterprise within the meaning of paragraph 1 of Article 10 (Associated enterprises) and continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or merchandise for the enterprise; or (b) he habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise from which he regularly delivers goods or merchandise for or on behalf of the enterprise; or (c) he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and the enterprises controlling, controlled by, or subject to the same common control, as that enterprise. 5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, if the activities of such an agent are carried out wholly or almost wholly for the enterprise (or for the enterprise and other enterprises which are controlled by it or have a controlling interest in it or are subject to same common control) he shall not be considered to be an agent of an independent status for the purposes of this paragraph. 6. The fact that a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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