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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 ..... provisions of sec.40(a)(i) of the Act. 3. The assessee paid the above amount to various nonresidents without deduction of TDS is not justified treating the same as export sales commission. Therefore, the Assessing Officer invoked the provisions of sec.40(a)(i) r.w.sec.195 and disallowed the same. 4. The Ld. DR submitted that the selling agent in this case though had rendered services abroad, was entitled to receive the commission for the services rendered to the assessee and received the amount through or from business connection which it had in India and source of income is in India. Being so, the income shall be deemed to accrue or arise in India. Since the source of income of the non-resident, who is the agent of the assessee, it earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-resident agents had provided abroad to the assessee was not clear from the order of the Assessing Officer. The opening of letters of credit for the purpose of completing the export obligation was an incident of export and, therefore, the non-resident agent was under an obligation to render such services to the assessee, for which commission was paid. The non-resident agent did not provide technical services for the purposes of running of the business of the assessee in India. Therefore, the commission paid to the non-resident agents would not fall within the definition of "fees for technical services" and the assessee was not liable to deduct tax at source on payment of commission". 5.1. The ld. AR, further submitted that the services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-resident. 5.3. The Ld. AR further submitted that income though accrued in India, the services were rendered to the assessee abroad and the payments were also received by them abroad, therefore, no income would arise under the provisions of sec. 9(1) of the Act. 6. We have heard the parties and perused the record. At the outset, certain provisions of the Act needs to be looked into section 40(a)(i) which reads as under:- "40 Not withstanding ............. (a) In the case of any assessee - (i) Any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938) royalty, fees for technical services or other sum chargeable under this Act, which is payable A. Outside India - B. In India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged the burden cast upon it to show the nature of services rendered by non-resident agent. If there are services rendered by non-residents, who have no permanent establishment in India or have any business connection in India, by virtue of which the payment of commission accrued or arose in India then, it is exempted, if the assessee is able to prove that the services were rendered by those non-residents at abroad. In the present case, the assessee has not established the facts on record that the non-resident has rendered services at abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or correspondence took between the parties. Without examin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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