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TMI Blog2015 (5) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Ld. CIT(A). - Decided against revenue. Disallowance u/s. 40(a)(i) read with section 195 - non-deduction of tax - CIT(A) deleted the disallowance - Held that:- for any amount on which tax has to be deducted u/s 195, one of the basic conditions is that the, said amount should be taxable in India. Ld. CIT(A) further observed that the parties who have rendered service to the assessee company outside India and are working as collection centres do not fall within the purview of section 195 because the amount of discount which is given to them are for rendering service outside India and hence these amount are not taxable in India. Keeping in view of the facts and circumstances explained above, we are of the view that it was not required on the part of the assessee to deduct tax on these discounts. Thus, the addition of ₹ 33,67,000/- made by the Assessing Officer U/S 40(a)(i) was rightly deleted by the Ld. CIT(A). - Decided against revenue. - ITA No. 1548/Del/2011, ITA No. 2276/Del/2012 - - - Dated:- 7-5-2015 - H. S. Sidhu, JM And J. S. Reddy, AM,JJ. For the Appellants : Shri Ramesh Chandra, CIT(DR) Shri BRR Kumar, Sr. DR For theRespondents Rep by: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of running clinical reference laboratories, to provide testing, diagnostic and progonostic monitoring services. The assessment was completed u/s. 143(3) vide order dated 24.12.2008 at an income of ₹ 5,30,26,939/- by making various additions. Aggrieved by the assessment order, the assessee filed the Appeal before the Ld. CIT(A) who vide impugned order dated 12.11.2010 has deleted the additions in dispute. 5. At the time of hearing, Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in its ground of appeal. 6. On the contrary, Ld. Counsel of the assessee relied upon the order passed by the Ld. CIT(A) and requested that the same may be upheld. 7. We have heard both the counsel and perused the records available on record with us, especially the orders passed by the Revenue Authorities. As regards Ground No. 1 relating to restricting the disallowance from ₹ 16,80,66,667/- to ₹ 11,78,24,030/- made u/s. 40(A)(i) of the I.T. Act. We find that before the Ld. CIT(A) assessee has stated that the receipt include payments received form SRL Labs, walk in patients and pathological labs owned by the assessee. The working submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; - The business operations were not carried out by the commission agents in India; and - The commission was earned by the agents for rendering services outside India, therefore the same could not be deemed to have arisen in India. Circular 23 dated July 23, 1969 (Refer page no 220 of the case law index) clearly clarified that income will not accrue or arise in India to a non-resident when commission is paid by an Indian exporter to a foreign agent operating overseas and in remitted directly to the agent. Relevant extracts from the Circular is as follows - 3. The following Clarifications would be found useful in deciding questions regarding the applicability of the provisions of section 9 in certain specific situations: (4) 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 incometax in India on the commission. The same point was clarified by a subsequent Circular no 786 dated February 07, 2000 which clearly stated that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in India. Keeping in view of the facts and circumstances explained above, we are of the view that it was not required on the part of the assessee to deduct tax on these discounts. Thus, the addition of ₹ 33,67,000/- made by the Assessing Officer U/S 40(a)(i) was rightly deleted by the Ld. CIT(A). Hence, we do not find any infirmity in the order of the Ld. CIT(A), therefore, we affirm the same and the Ground No. 2 raised by the Revenue stands rejected. ITA NO. 2276/DEL/2012 (AY 2008-09) 9. Briefly stated the facts are that the assessee filed return declaring an income of ₹ 8,26,20,030/- electronically on 28.9.2008 and the same was processed u/s. 143(1) on 19.3.2009. The case was selected for scrutiny under CASS and notice u/s. 143(2) was sent on 21.7.2010. In response to notices, Ld. Counsel of the assessee appeared before the AO from time to time and submitted the requisite details which were verified and placed on record. The assessee company is engaged in the business of running state of the art, diagnostic laboratories, which conducts tests meant for diagnosis of various ailments of human beings. The assessment was completed u/s. 143(3) vide order dated 20.12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal also in it order has refrained from adjudicating this particular of the case which was carried by the assessee before it. 4. The fact situation adjudication by the CIT(A)/ITAT of the second ground about the disallowance u/s 40(a)(i) amounting to ₹ 1,23,54,189/- is also identical to the ground referred to in para 3 above. In short, this ground is also as such is also not covered by the Tribunal's order. 5. In view of the above it is clear that it was not proper on assessee AR's part to seek refuge of the Tribunal's order which too incidentally is not found to have adjudicated the AO's material alternative aspect of the case qua the applicability of section 194C of the Act which if considered would have resulted in endorsement of AO's order at least partly. 6. In view of the above, it is prayed (a) either to release the matter for being heard in reference to sec. 194C de-novo especially when the Revenue was not even heard in the appeal at all; (b) or to restore the matter back to the CIT(A) with the directions to adjudicate the alternative application of section 194C of the Act. 10. On the contrary, Ld. Counsel of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirm the decision of the Ld. CIT(A) of deleting the addition of ₹ 17,28,04,843/- and dismiss the ground no. 1 raised by the Revenue in its Appeal. 12. As regards Ground No. 2 relating to deletion of addition of made by the AO u/s. 40(a)(i) amounting to ₹ 1,23,54,189/- is concerned, we find that the Ld. CIT(A) has observed that AO has made the disallowance u/s. 40(a)(i) of the Act amounting to ₹ 1,23,54,189/- being discount allowed to international customers, by treating such amount as foreign payment made by the assessee and holding that the assessee should have deducted at source u/s. 195 of the Act on such amount in the absence of a NIL withholding tax certificate u/s. 195(2) of the Act. We find considerable cogency in the observations of the Ld. CIT(A) that his predecessor has given relief to the assessee for its own case for AY 2006-07 stating that: for any amount on which tax has to be deducted u/s. 195, one of the basic conditions is that the said amount should be taxable in India. The parties who have rendered service to the assessee company outside India and are working as collection centres do not fall within the purview of section 195 because t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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