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TMI Blog2015 (9) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of Rs. 11,42,000/-made on account of commission payment to non-resident for which the Revenue has raised following grounds :- (1) The ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 11,42,000/- made on account of commission payment to non-resident without verifying the services rendered by the non-resident and also without considering the remand report furnished by the A.O. (2) On the facts and circumstances of the case, the ld. CIT(A) ought to have upheld the order of the Assessing Officer. (3) It is, therefore, prayed that the order of the ld. CIT(A) may be set aside and that the order of the Assessing Officer be restored to the above extent. 3. Brief facts of the case are that notice under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue. No such provisions for payments of commission within a period of 12 months were noticed either u/s 139(1) or u/s 195 of the Act. Thus, there is no substance in the finding given by the assessing officer in pra -4 of the assessment order and the same is rejected. 2.3 There is no dispute about the earning of commission by a nonresident, a Dubai based concern named 7Secure Technologies LLC, and subsequent payment thereof in dollars through Bank of India. The concern 7Secure Technologies LLC is not having its permanent establishment or business operations in India and therefore, the commission income of Rs. 11,42,000/- credited/paid to 7 Secure Technologies LLC was not taxable in India and no such assessment was made or contemplated to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the appellant was not liable to deduct tax at source (TDS) for the commission credited to the account of 7 Secure Technologies LLC, Dubai. The disallowance so made u/s 195 of the Act is thus deleted." 4. Aggrieved, Revenue has filed the appeal before the Tribunal. During the course of argument ld. DR has supported the observations of the AO and said that assessee has not complied with the provisions of section 195 of the Act. Therefore, the commission payable should be added to the income of the assessee. 5. On the other hand, the ld. counsel on behalf of the assessee made following submissions :- "2.1 During the course of assessment proceedings, the AO noticed that the appellant had claimed commission expenses of Rs. 11,42,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs to submit that the impugned disallowance was not justified both on facts and in law as under : 1) Firstly, the foreign party had not rendered services in India to the appellant nor maintained any place of permanent residence in India. It had rendered services by way of negotiating and procuring order for vehicles at abroad for which it was paid commn.@ US $ 80/- per vehicle. Even the payment was remitted thru Bank of India as per its OR advice dt.15.12.2010 and copy of Form No.15CA and 15CB submitted as per Sec.195. The relevant documents are enclosed in the paper book. Thus the aforesaid evidence clearly show that the impugned commn. Was paid to the foreign agent for the services rendered outside India. 2) Secondly, though the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned disallowance should be deleted." 6. We have heard the rival contentions and gone through the facts and circumstances of the case as well as written submissions filed on record by the assessee. AO has disallowed the commission expenses of Rs. 11,42,000/- on the basis of his finding that assessee has not paid the actual payment within the prescribed period of 12 months framed u/s 139(1) of the Act the whole expenses claimed by the assessee is not justified and hence not allowable u/s 195 of the Act. Section 139(1) reads as under :- (1) Every person - (a) Being a company (or a firm) or (b) Being a person other than a company (or a firm) if his total income or the total income of any other person in respect of which he is assessable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more; Shall furnish a return, of his income (during any previous year ending before the 1st day of April, 2005) on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; .......................... From going through section 139(1), there is no such provision mentioned in which some time prescribed period of 12 months is required for making the payment of commission to non-resident. Therefore, the reference given by the AO of section 139(1) of the Act is not correct. Further the AO has disallowed the commission payment referred to section 195 of the Act but he has not dealt with the applicability of section 195 with reference to the facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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