9911796707
TMI Blog2025 (5) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by Ld. CIT(A), three notices dated 04.01.2021, 03.11.2011 and 03.12.2024 were issued by Ld. CIT(A) to the appellant for compliance of the directions contained therein, but the appellant failed to comply with the same. Consequently, Ld. CIT (A) dismissed the appeal and confirmed the assessment order, while observing that appellant had nothing to substantiate its contentions against the additions made by Assessing Officer. 6. It is true that the appellant was required to comply with the directions issued by Learned CIT(A) in the 3 notices, but it remained non compliant. In the given situation, while deciding the appeal, Learned CIT (A) should have dealt with the issues involved and decided the appeal recording his reasons and findings in respect of the 3 additions/disallowances. 7. No new evidence has been referred to or relied on by the appellant, in the course of arguments. We find that the three issues can be adjudicated here on the basis of material already placed on record. 8. As regards the first disallowance u/s. 40(a)(i) of the Act, the Assessing Officer observed that the assessee was found to have paid commission of Rs. 12, 10,958/- to foreign agents as sales com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs for the assessee. The details of the commission paid by the assessee are as under:- S. No. Name of Agent Address Commission 1. Mr. Claudio Haberl A/c AV. Sesquicentenario 4540 CP1613, Buenos Aires, Argentina 22, 06,46,7.00 2. Md. Habibur Rahman Kalibarl, Azizabad, Patharghata Barguna 3, 31,442.00 3. Nadia Anwar hasan Ali AL-Shekh, Othman, Snafer Building Yemen 4, 68,120.00 4 Reinhard Bosse UND Geschaftskunden Ag, Bahnhofstrabe 17, 49525 Lengerich, Germany 7, 10,060.00 5. Shamlan Naseer Ali Doha, Qatar, YEMEN 1, 76,698.00 Total: 38, 92,787.00 The AO has disallowed the said amount u/s. 40(a)(i) on the ground that the assessee has not deducted the tax at source as required u/s. 195(1) of the Act. The AO has given much emphasis to explanation-II to Section 195(1) of the Act. The AO also held that the payment in question is Fee for Technical Services (FTS) because the non-residents have rendered the service of managerial in the nature which falls in the ambit of definition of Fee for Technical Services u/s. 9a(1)(vii) of the Act. It is pertinent to note that the provisions of Section 40(a)(i) can be applied only respect of sum payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making the payment of commission to non-resident. Therefore, the ld. CIT (A) has accepted the nature of payment as commission and not fee for technical service. The relevant finding of the ld. CIT (A) in para 4.3 as under:- "4.3 I have gone through the assessment order, statement of facts, grounds of appeal and written submissions carefully. It is seen that the AO after discussing the provisions of Section 195, including the Explanation 2, has concluded that the appellant was required to deduct the tax at source while making the payment of above referred expenses even, to the non-resident persons, whether or not the non-resident person had a residence or place of business or business connection in India or any other presence in any manner whatsoever in India. The explanation 2 has been inserted by the Finance Act of 2012 with retrospective effect from 01.04.1962. I am of the considered view that the argument of the appellant that since the non-resident persons whom the payments were made did not have place of business or business connection in India, therefore, the appellant was not required to deduct tax at source on the above referred payments, is not correct. Regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or arising outside India shall not be deemed to be received 14 in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2.-For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued 15 or arisen 15 or is deemed to have accrued 15 or arisen 15 to him shall not again be so included on the basis that it is received or deemed to be received by him in India. Therefore, commission paid to non-resident outside India for the services rendered outside India will not fall in the category of the income received for deemed or received in India as well as accrues or arises or is deemed to accrue or arise in India. Thus, the said amount paid to non-resident does not fall in the scope of total income of non-resident and consequently it is not chargeable to tax in India under the provisions of the Act. Even otherwise the said income in the hands of non-resident has to be considered in the light of the provisions of DTAA between India and the Country of the non-resident. In the absence of P.E. of the non-residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has relied on decision in PCIT vs. GVK Projects and Technical Services, (2019) 106 taxmann.com 181 (SC) 18. As per section 14A of the Act, for the purposes of computing total income, no deduction is allowable in respect of expenditure said to have been incurred by the assessee in relation to income which does not form part of the total income under the Act. In PCIT v. GVK Project and Technical Services Ltd., (2019) 106 taxmann.com 181(SC). Therein, reference was made to decision by Delhi High Court in Cheminvest Limited v. CIT-VI, ITA No.749/2014) which was to the effect that section 14A would not apply where no exempt income is received or receivable during the relevant previous year. In other words, where there is no exempt income earned by an assessee in the previous year, no question of disallowance of expenditure incurred to earn exempt income would arise. 19. Herein, it is not case of the department that the appellant earned any exempt income due to investments in equities. Rather, as rightly submitted on behalf of the appellant, the Assessing Officer observed in the assessment order that the investments made by the appellant in equities would not generate exempt inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
