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TMI Blog2014 (6) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... f commission to foreign agents did not entitle such foreign agents to pay tax in India and thus the TDS was not liable to be deducted u/s 195 of the Act - The disallowance made by AO u/s 40 (a) (i) for non-deduction of tax at source u/s 195 were not justified. The fact situation did not contemplated or clarified in the explanation added by Finance Act, 2010 is applicable as the agents appointed by the assessee had their offices situate in a foreign country and that they did not provide any managerial services to the assessee - Section 9 (1) (vii) deals with technical services and has to be read in that context - The agreement of procuring orders would not involve any managerial services - The agreement did not show the applicability or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent entities? (3) Whether the Hon'ble Income Tax Appellate Tribunal has erred in law in deleting the disallowance without appreciating the facts that the Assessing Officer disallowed the payment u/s 40 (a) (ia) of the Act in respect of commission paid to agents in violation of provisions of section 195 read with section 9 (1) (vii) of the I.T. Act, 1961? We find that all the questions as framed by the department are covered by our judgment in CIT v. M/s Model Exims, Kanpur, Income Tax Appeal (Def.) No.164 of 2011, decided in favour of the assessee and against the revenue on 10.09.2013 and the judgment in CIT, Kanpur v. M/s Allied Exims, Income Tax Appeal No.313 of 2013 decided on 13.11.2013. In both these judgments we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich have been confirmed by the ITAT is quoted as below:- 5.3.2 The A.O. has also invoked the provisions of Section 9 (1) (vii) on the premise that such payments also fall under FTS. In this regard she has observed that normally the exporter appoints the agents as his selling agent, designer technical adviser for his products. He has further observed that being commission agent required managerial acumen expertise and therefore, would be covered under Section 9 (1) (vii) of the Act as managerial services. On perusal of the assessment order and assessment folder, I find that the A.O. has not brought anything on record which could demonstrate that these agents had been appointed as selling agents, designers technical adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrue in India. Accordingly, the appellant was not required to deduct Tax at Source u/s 195 in respect of commission paid to the Foreign Agents. Disallowance u/s 40 (a) (i) is, therefore, deleted. Shri Bharat Ji Agrawal submits that the CIT (A) and ITAT have not considered the explanation added to Section 9 (1) (vii) by the Finance Act, 2010 w.e.f. 1.6.1976 and which provides that for the purpose of second proviso the income of such non-resident shall be deemed to accrue or arise in India under Clause (v) or Clause (vi) or Clause (vii) [of sub-section (1)] and shall be included in total income of non-resident whether or not, non-resident has residence or place of business or business commission in India; or non-resident has rendered s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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