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TMI Blog2010 (8) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed out by the parties. 3. In both the departmental appeals, the revenue challenged the order of the order of the learned CIT(A) in deleting the disallowance u/s 40(a) ( i) of the IT Act of ₹ 26,15,696/- and ₹ 37,35,582/- respectively in both the assessment years on account of commission payment in foreign currency to foreign agent, in connection with exports made by the assessee without deduction of tax at source. The AO made the additions in both the assessment years on the ground that explanation of the assessee is not acceptable in view of the provisions of section 40 (a) (i) read with section 195 of the IT Act. The disallowance was accordingly made on account of both unexplained expenditure as per provisions mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to non-residents in respect of business carried outside India, tax is not chargeable in India and hence the assessee did not deduct tax at source from such payment. It was submitted that CBDT circular No.786 dated 07-02-2000 has been withdrawn with immediate effect from dt. 20.10.09 without having any retrospective effect and hence the assessee has no obligation to deduct tax at source for such payment of commission and that the decision of the Hon ble Supreme Court in the case of Transmission Corporation of A. P. Ltd. Vs CIT 239 ITR 587 supports the claim of the assessee. The learned Counsel for the assessee further submitted before the learned CIT(A) that the AO himself in the remand report in the appeal for AY 2005-06 stated that payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier circulars were withdrawn with immediate effect vide circular dated 23-10-2009, therefore, earlier circulars are no longer in existence. On the other hand, the learned Counsel for the assessee reiterated the submissions made before the authorities below and filed copy of the remand report dated 19-08-2009 filed by JCIT, Panchmahal Range, Godhra for assessment year 2005-06 as is referred by the learned CIT(A) in the impugned order and submitted that since TDS was not to be deducted as per earlier circulars of the Board and that JCIT, Godhra has accepted the claim of the assessee in assessment year, therefore, on principle of consistency the learned CIT(A) was justified in deleting the addition. The learned Counsel for the assessee su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger survive. However, we do not agree with the submissions of the learned DR because later circular dated 23-10-2009 was having no retrospective effect and also could not have the effect to the assessment years where the assessee filed the return of income on time in accordance with the existing Board circular. Therefore, there was no default on the part of the assessee not to deduct TDS in such circumstances based upon its opinion on the CBDT circulars. The JCIT, Godhra Range in the case of the same assessee for assessment year 2005-06 (copy of which is filed by the learned Counsel for the assessee) examined similar issue and the AO stated in the remand report that the assessee complied with the conditions of the earlier Board Circular No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, the rule of consistency should be followed . Considering the above, in the light of the finding of the learned CIT(A), we are of the view that since the claim of the assessee was based upon the circular existing at the time of assessment year under appeal and the view of the assessee has been accepted by the AO in assessment year 2005-06, therefore, the learned CIT(A) was justified in deleting the additions. We, therefore, do not find any perversity in the approach of the learned CIT(A). We confirm his findings and dismiss both the appeals of the revenue. 8. In the result, both the departmental appeals are dismissed. C. O. No.228/Ahd/2010 (by assessee) (In ITA No.1443/Ahd/2010) 9. The assessee in the Cross Objection for ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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