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TMI Blog2013 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs.37,87,26,158/-, actually paid and incurred as expenditure by the respondent assessee, has been disallowed relying upon Section 40(a)(i) of the Act. 2. Factually, there is no dispute and it is accepted that the payments were made and are genuine payments. It is accepted that the parties to whom payments have been made do not have permanent establishment in India. These third parties were paid for having procured or obtained export orders, clearance of goods abroad, support in scheduling timely inspection of goods, insurance, clearance, follow up, arranging payments etc. The payments made to these foreign parties were within the limit prescribed by Reserve Bank of India and were made through proper banking channels. 3. The res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os. 23 dated 23rd July, 1969 and 786 dated 7th February, 2000 do not make any such distinction. The relevant portions of the said circulars were quoted in Eon Technology Private Limited (supra) and read as under:- "Circular No. 23, dated July 23, 1969 Foreign agents of Indian exporters.- A foreign agent of Indian exporter operates in his own country and no part of his income arises in India. His commission is usually remitted directly to him and is, therefore, not received by him or on his behalf in India. Such an agent is not liable to income-tax in India on the commission. Circular No. 786, dated February 7, 2000 As clarified earlier in Circular No. 23, dated July 23, 1969, (see under section 5) where the non-resident agent operates o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigate the rigours of the application of a particular provision of the statute in certain situations by applying a beneficial interpretation to the provision in question so as to benefit the assessee and make the application of the fiscal provision, in the present case, in consonance with the concept of income and in particular, notional income as also the treatment of such notional income under accounting practice. 16. In the premises the majority decision in State Bank of Travancore v. CIT [(1986) 2 SCC 11 : 1986 SCC (Tax) 289 : (1986) 158 ITR 102] cannot be looked upon as laying down that a circular which is properly issued under Section 119 of the Income Tax Act for proper administration of the Act and for relieving the rigour of too l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form. It is meant for a uniform administration of law by all the Income Tax Authorities in a specific situation and, therefore, validly issued under Section 119 of the Income Tax Act. As such, the circular would be binding on the Department." 8. Referring to this decision, in Catholic Syrian Bank Limited versus Commissioner of Income Tax, (2012) 3 SCC 784, it has been observed that the Central Board of Direct Taxes has statutory right to issue circulars under Section 119 of the Act to explain or tone down the rigours of law and to ensure fair enforcement of the provisions. Circulars issued have force of law and are binding of the Income Tax authorities though they cannot be enforced adversely against the assessee. Normally these circulars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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