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TMI Blog2016 (1) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... sident agent. Therefore, it is appropriate to remit the entire issue back to the file of the AO with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad. Accordingly, the entire issue is remitted back to the file of the AO for fresh consideration and the AO is directed to make necessary enquiry regarding the nature of services rendered by the non-resident agent and the payments made thereof. - Decided in favour of revenue for statistical purposes. - ITA No. 1797/Mds/2015 - - - Dated:- 16-10-2015 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri A.B.Koli, JCIT For The Respondent : Shri S. Sridhar, Advocate ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of determining the situs of their income. According to the ld. DR, non-deduction of TDS towards this income is to be disallowed. 5. On the other hand, the Ld. AR submitted that the income accrued outside India for the services rendered for marketing and the recipient of the commission has no business connection in India, what is paid to the non-resident is not taxable in India. Hence, there is no question of TDS from that payment. According to the ld. AR, this issue is squarely covered by the judgment of the Madras High Court in the case of CIT v. Faizan Shoes P. Ltd. (367 ITR 155), wherein it was held, dismissing the appeal, that on a reading of section 9(1)(vii), commission paid by the assessee to the non-resident agents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be deleted. 5.2. According to the ld. A.R., the income has been accruing outside India for the services rendered for marketing assessee s products in abroad and recipient has no business connection in India, what is paid to the agent is not taxable in India, hence, there is no question of deduction of tax at source from that payment and no assessment of recipient has been made in India. Further, he submitted that only when the income of the agent is chargeable to tax under the provisions of the Act, then only the assessee is liable to deduct TDS as per sec. 195C of the I.T. Act. The person paying the commission to a non-resident is not liable to deduct tax if such services are not chargeable to tax under the Act. Sec. 195 contemplates n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be made in case of any payment made which is chargeable under this Act and is payable outside India or in India to a nonresident not being a company or to a foreign company on which tax is deductible at source. Therefore, the first condition required to be fulfilled is the payment must be chargeable under the Act, thereafter the question of deduction of tax will arise. Section 195 (1) of the Act also prescribes that tax has to be deducted while making payment to non-resident which is chargeable under the provisions of the Act. Therefore, the condition precedent for deduction of tax is the income must be chargeable under the provisions of the Act. In the facts of the present case, the assessee has not produced the agreement entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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