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TMI Blog2015 (4) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within the definition of fees for technical services, we are the firm view that section 9 of the Act is not applicable to the case on hand and, consequently, section 195 of the Act does not come into play. Also see Faizen Shoes case [2014 (8) TMI 170 - MADRAS HIGH COURT]- Decided in favour of assessee. - T.C.A. NO. 137 OF 2015 - - - Dated:- 24-3-2015 - R.Sudhakar And R.Karuppiah JJ. For the Appellant : Mr. T.R.Senthil Kumar Judgment (DELIVERED BY R.SUDHAKAR, J.) This Tax Case (Appeal) is filed by the appellant/Revenue as against the order passed by the Income Tax Appellate Tribunal for the assessment year 2009-10 raising the following questions of law :- 1) Whether under the facts and circumstances of the case, the Income Tax appellate Tribunal was correct in deleting the disallowance made under Section 40(a)(ia) by the assessing officer towards export commission paid by the assessee to the non-resident on which it had failed to deduct TDS? 2) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in holding that the assessee has no liability to deduct tax at source under Section 195 on the payment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s.Farida Shoes P. Ltd. (in ITA No.159/Mds/2013 dated 11.04.2013), I hold that the above transactions of sales commission payments to the non-resident for procuring the export orders, are not assessable to tax in India and consequently the assessee company is not under any obligation to deduct the TDS on the above commission payments u/s.195 of the Act. Therefore, the provisions of sec.40(a)(i) have no application in the present case. Accordingly, the additions made by the Assessing Officer in the assessment year under consideration, on account of disallowance of commission payments for non-deduction of TDS u/s.40(a)(i) r.w.s. 195 of the Act, are not justified and deleted. 4. Against the said order of the Commissioner of Income Tax (Appeals), the appellant/Revenue filed appeal before the Tribunal. The Tribunal while agreeing with the findings of the Commissioner dismissed the appeal holding as follows: When the non-resident agent has rendered all services outside India and payments were also received outside India, having no PE or business connection in India, there is no reason to hold that the foreign agent has earned any taxable income in India out of the commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be income of the recipient chargeable under the head 'Salaries'. (2) Notwithstanding anything contained in sub-section (1), any pension payable outside India to a person residing permanently outside India shall not be deemed to accrue or arise in India, if the pension is payable to a person referred to in article 314 of the Constitution or to a person who, having been appointed before the 15th day of August, 1947, to be a Judge of the Federal Court or of a High Court within the meaning of the Government of India Act, 1935, continues to serve on or after the commencement of the Constitution as a Judge in India. Explanation.For the removal of doubts, it is hereby declared that for the purposes of this section, income of a 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 the total income of the non-resident, whether or not, (i) the non-resident has a residence or place of business or business connection in India ; or (ii) the non-resident has rendered services in India. 7. On a reading of section 9(1)(vii) of the Act, we are not inclined to accept the plea ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incomes deemed to have accrued or arisen in India as they, according to the department, had either accrued or arisen through and from the business connection in India that existed between the non-resident assessees and the statutory agent. This contention overlooks the effect of clause (a) of the Explanation to clause (i) of sub-section (1) of section 9 of the Act which provides that in the case of a business of which all the operations are not carried out in India, the income of the business deemed under that clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. If all such operations are carried out in India, the entire income accruing therefrom shall be deemed to have accrued in India. If, however, all the operations are not carried out in the taxable territories, the profits and gains of business deemed to accrue in India through and from business connection in India shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. If no operations of business are carried out in the taxable territories, it follows th ..... 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