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Issues involved: The only issue involved in this appeal is the deletion of addition made on account of disallowance of sales commission u/s 40(a)(i) of the Act.
Summary: 1. The appellant, the Revenue, challenged the order of the ld. CIT(A) regarding the deletion of addition made on account of disallowance of sales commission u/s 40(a)(i) of the Act for the assessment year 2005-06. 2. The assessee, engaged in the manufacture of automobile wheels, claimed sales commission without deduction of tax at source. The Assessing Officer disallowed the amount, but the assessee argued that the payments were made to non-residents for export orders solicited outside India, and no income accrued in India. The ld. CIT(A) deleted the addition based on various decisions, which the Revenue now challenges. 3. The issue was found to be covered by the decision of the Hon'ble Supreme Court in GE India Technology Centre(P) Ltd vs CIT, [2010] 327 ITR 456. The Court emphasized that tax deduction is only required if the income is assessable in India, and payments not chargeable under the Act do not necessitate tax deduction. The Court clarified the obligations under section 195 regarding tax deduction at source for non-residents. 4. Respecting the Supreme Court's decision, the Tribunal dismissed the Revenue's appeal, as the payments for sales commission to non-residents were not chargeable under the Act, and therefore, tax deduction was not required. 5. Consequently, the appeal of the Revenue was dismissed, upholding the deletion of the addition made on account of disallowance of sales commission.
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