9911796707
TMI Blog2014 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... t Ld. CIT Delhi-IV, New Delhi vide order dated 21.10.2010 passed u/s 263 of the I. T. Act, 1961 had set aside the order of the A.O. dated 10.12.2007 on the ground that the A.O. has failed to make any inquiry/investigation into admissibility of the expenditure on market development of Rs.1,56,30,554/- debited to P & L account. In the course of fresh proceedings before the A.O., the assessee duly furnished the copy of relevant agreement with the Foreign Service Provider and also furnished details of the amounts paid to the Foreign Service provider for promotion of the business of the assessee, particularly, in USA and UK. It was submitted by the assessee before the A.O. that the service provider did not carry on any business through a private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is as under: - Status CRM International LLP (USA) Firm Rs.79,69,200/- Mr. Edward Charles Bats (UK) Indl. Rs.36,84,668/- Sri Sampath (UK) Indl. Rs.27,05,872/- Rs.1,43,59,740/- The assessee during the course of proceedings had also made detailed submissions dated 23.12.2010 in support of its claim that no tax was deductible in respect of remittance of Rs.1/43/59/740/- made to foreign service providers/ as the remittance did not fall within the meaning of lee for technical services/. Similarly/ the assessee also explained that business promotion expenses and entertainment expenses incurred in India were not liable for any tax deduction at source. However/ in respect of advertisement and public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee during the year. They have also no PE in India within the meaning of relevant DTA Agreements. These service providers are covered by Article 15 of the respective DTAA. It has been held by the Hon'ble Supreme Court in GE India Technology Center (P) Ltd. vs. ClT (2010) 327 ITR 456 (SC) that most important expression in section 195(1) consist of the words I/chargeable under the provisions of the Act", a person paying interest or any other sum to a non-resident is not liable to deduct tax, if such sum is not chargeable to tax under the Act. Section 5(2) provides - subject to the provisions of this Act, the total income of any previous year of a person who is a non resident includes all income from whatever source derived, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (Professional Sales Representatives), as no income accrues or is deemed to accrue in India; and as such, the disallowance made by the AO is uncalled for and legally untenable. Reliance in this regard is also placed on the decision of Ind Telesoft Pvt. Ltd. (2004) 267 ITR 725 (AAR).-----------." 4. To buttress the above argument, the assessee also relied upon the decision of Ind Telesoft Pvt. Ltd. (2004)267 ITR 725 (AAR) and CIT vs Ion Technology Pvt. Ltd. 46 SOT (2011) 323 (Del.) and further reliance was placed on Circular No.786 dated 07.02.2000 issued by CBDT clarifying the taxability of export commission payable to non residents rendering services abroad and also filed copy of such circular to plead for deletion of addition made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviders, as these marketing and selling agents have no PE in India and they have rendered the services in foreign countries to foreign customers and have received the payments for such services rendered outside India and as such no income accrued or deemed to accrue in India within the meaning of section 4(1) read with section 5(2) of the Income Tax Act. I agree with the contention of the appellant that the service providers are just foreign sales representatives or marketing and selling agents engaged by the appellant for promoting its business in USA and UK. The appellant has also furnished the income/sales booked by the company from USA and UK due to the services rendered by these service providers. The service providers had rendered se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rendered outside India. Said Circular had also been rightly relief on by the Commissioner (Appeals). Nothing to the contrary had been argued on behalf of the Department. The CBDT Circulars are binding on the taxing authorities. (Para 28).-----------" The jurisdictional High Court of Delhi has also upheld the above said decision in CIT vs. Econ Technology (P) Ltd. (2012) 246 CTR (Del) 40. In view of the above decision, I therefore, hold that the appellant was not liable to deduct tax at source under section 195 of the Income-tax Act, as no income accrued or arose or deemed to accrue or arise in India. The disallowance made by the AD of RS.l,56,30,550/- account of alleged failure to deduct tax at source is therefore deleted." 5. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
