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TMI Blog2015 (10) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the case of Dy. CIT v Angelique International Ltd. (2013 (10) TMI 17 - DELHI HIGH COURT) we hold that the payment made for technical services will not fall in the category of “Fee for Technical Services” as defined u/s 9(1)(vii) of the Act. Accordingly, we hold that the Assessee is not liable to deduct tax at source from the commission payments made to the foreign agents in the facts and circumstances of the instant case. Accordingly, we set aside the order of ld. CIT(A) and direct the AO to delete the impugned disallowance. - Decided in favour of assessee. - I.T.A. No. 9054/Mum/2010, I.T.A. No. 7458/Mum/2011 - - - Dated:- 8-10-2014 - Shri B. R. Baskaran (AM) And Vivek Varma, (JM),JJ. For the Appellant : Shri Vijay M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia and since it is not taxable in the hands of the recipients as per the DTTA entered by India with UK and Turkey, tax was not required to be deducted at source. The AO, however, took the view that the impugned commission was paid to the foreign agents in connection with the services rendered for popularizing the brand of the assessee, contacting more clients on behalf of the Assessee and for giving the information in respect of prospective customers to the Assessee. Accordingly, the AO took the view that the above said services rendered by the foreign commission agents would clearly fall under the category of managerial services included in the definition of Fee for technical services as defined in section 9(1)(vii) of the Act. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices was examined by the Hon ble Madras High Court in the case of CIT V/s Faizan Shoes Pvt Ltd in TC (A) 789 of 2013 and the Hon ble High Court, vide its order dated 22.7.2014 has held the services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services . Accordingly, the Hon ble Madras High Court held that Section 9 of the Act is not applicable to the case and consequently, Section 195 of the Act does not come into play . The ld. AR also placed reliance on the decision rendered by Delhi Bench of the Tribunal in the case of Dy. CIT v .Angelique International Ltd. (2013) 55 SOT 226 (Delhi) (Trib.), wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fee for technical services after the insertion of Explanation below sec. 9(2) of the Act. He submitted that the above said Explanation was first inserted by Finance Act, 2007 w.r.e. from 1.6.1976 and later amended by Finance Act, 2010. He submitted that, by the time the amendment was brought into the Act, the assessee had already paid the commission amount to the foreign agents. Accordingly he submitted that the disallowance cannot be made u/s 40(a)(ia) of the Act in respect of a past action on the basis of subsequent amendment brought into the Act with retrospective effect. For this proposition, he placed reliance on the following decisions:- (a) M/s Kerala Vision Ltd Vs. ACIT (ITA No.794/Coch/2013 dt. 06.06.2014) (b) Infotech Ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has held that the circular No.7 of 2009 shall have prospective effect. Accordingly he submitted that the assessee is not liable to deduct tax at source from the Commission Payments made to the foreign agents as per the Old circulars referred above. 8. Accordingly, the Ld A.R contended that the disallowance made u/s 40(a)(i) is not correct in law, since the assessee is not liable to deduct tax at source from the Commission payments. On the contrary, the Ld D.R placed reliance on the order of Ld CIT(A). 9. We find merit in the contentions put forth by Ld A.R. Accordingly, we hold that the Assessee is not liable to deduct tax at source from the commission payments made to the foreign agents in the facts and circumstances of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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