TMI Blog2021 (10) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. - ITA No. 2996/Del/2016 - - - Dated:- 14-10-2021 - Kul Bharat, Member (J) And O. P. Kant, Member (A) For the Appellant : Anil Chopra, Adv., Kshitij Khanna and Praveen Kumar, CAs For the Respondents : Gaurav Pundir, Sr. DR ORDER Per O. P. Kant, AM This appeal by the assessee is directed against order dated 21/04/2016 passed by the Learned Commissioner of Income-tax (Appeals)-18, New Delhi [in short 'the Learned CIT(A)'] for assessment year 2012-13, raising following grounds: 1. That the Ld. Commissioner of Income Tax (Appeals) (Ld. CIT(A)) has erred on facts and in law in sustaining the disallowance of ₹ 1,16,99,172/- being the amount of commission paid to nonresident foreign payee, M/s. Ace Trading Company, France, for procuring export orders in France, which was disallowed by the Ld. AO for non deduction of TDS thereon. 2. That the order of Ld. CIT(A) disallowing the said commission of ₹ 1,16,99,172/- is without any proper basis and is based on erroneous views and non-appreciation of the facts and law involved, without properly considering the material on record and without affording appropriate specific lawful oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of proprietary concern 'Regency Impex'. For the year under consideration, the assessee filed return of income on 27/09/2012, declaring total income of ₹ 50,52,980/-. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short 'the Act') were issued and complied with. The Assessing Officer completed the scrutiny assessment under section 143(3) of the Act after making certain additions/disallowances to the returned income. On further appeal, the Learned CIT(A) allowed part relief to the assessee and sustained disallowance of commission expenses. Aggrieved, the assessee is before the Tribunal raising the grounds as reproduced above. 3. Before us, the parties appeared through Videoconferencing facility. The assessee filed a paper-book containing pages 1 to 83. All the grounds raised in the appeal are related to single issue of disallowance of export commission expenses. 3.1. The brief facts qua the issue in dispute are that the M/s. Ace Trading Company, France (In short 'Ace') was appointed by the assessee in earlier years for assistance in procuring export or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P Vs. Income Tax Officer International Taxation Ward 1(1))2), Mumbai, ITA No. 5085/Mum/03 has clarified the position of the provisions of section 9(1)(vii) as on date. The relevant para of the judgment are as under- - Taxability under the domestic law One of the arguments which is raised by the learned counsel for the assesses, in support of the conclusions arrived at by the CIT(A) to the effect that income from only such services can be brought to tax in India as are rendered through the Indian permanent establishment is that even under the domestic taw, only income relatable to the services rendered in India can be taxed in India. Learned counsel did not dispute that so far as income from the work carried out by the assessee in India is concerned, the same is taxable in India under the domestic taw, though he hastened to add that this aspect of the matter is wholly academic since under the applicable tax treaty, the income from even work done by the assesses in India cannot be brought to tax In India. On the question of taxability under the domestic law, learned counsel's basic contention is that even under the domestic law, the income of the assesses firm is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of relief, or as the case may be, for avoidance of double taxation, then, in relation to the assesses on whom such agreement applies, the provisions of this Act shall apply only to the extent they are more beneficial to that assesses. The provisions of tax treaties thus override the provisions of the Income Tax Act, except to extent provisions of the Income Tax Act are beneficial to the assesses. The taxability under demesne law is thus to be examined in conjunction with the provisions of the cab's tax treaty. The next question that we need to examine, therefore, is whether the status of taxability of this income under the provisions of the India UK tax treaty. 4.5 In the case of Ashapura Minichem Ltd., it has been held by the ITAT, Mumbai that the services rendered outside India and utilized by an Indian assessee will chargeable to tax in India. In view of the foregoing discussion it is clear that the case of the assessee is squarely covered under the provision of section 9 of the Income-tax Act, 1961. 3.2. In view of the above, the Assessing Officer held the assessee in default for non-deducting tax at source on the export commission and consequently, in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal (supra) has dismissed the appeal of the Revenue challenging deletion of disallowance in terms of section 40(a)(i) observing as under: 7. We have heard both the parties and perused the material available on record. The issues involved in this appeal relates to applicability of TDS u/s. 195 on payments abroad of export commission to non-resident the foreign agent for the procurement of export orders for the assessee and consequently disallowance u/s. 40(a)(i) of the Income Tax Act, 1961. As pointed out by the Ld. AR the issue is covered in favour of the assessee in case of DIT Vs. Panalfa Autoelektrik Ltd. 378 ITR 205 wherein it is held that commission paid by the assessee to its foreign agent for arranging of export sales and recovery of payments could not be regarded as Fee for Technical Services u/s. 9(1)(vii). In the present case, the commission was paid to ACE Trading, a non-resident agent (payee) who is a tax resident of France. The payee was simply assisting procuring export orders for the Assessee in his ordinary course of business in France. The commission was paid for activities of the payee outside India and the amount is received by the payee outside India thro ..... 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