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TMI Blog2016 (4) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The assessee is engaged in the business of export of garments manufactured by it. On perusal of accounts it was observed by the assessing officer that the assessee has paid a sum of Rs. 6,79,40,492/- and no TDS was deducted. Therefore, the AO called the assessee to explain as to why this amount should not be added to the total income of assessee on the ground that neither the assessee obtained TDS certificate from the department u/s 195(2) nor the TDS was deducted. The submissions of the assessee did not find favour of the AO and accordingly, by invoking he provisions of section 40(a)(i) of the Act the additions were made. Aggrieved by the order of AO, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) accepted the contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord. We find that the assessee has paid commission to a person who is non-resident. As per the CBDT Circular supra, if a person pays commission to the non-resident no tax be deduced from the payment. We find that an identical issue had come up before the Mumbai Bench of the Tribunal in Vilas N Tamhankar(supra) and Welspring Universal (supra), wherein this issue has been decided in favour of the assessee by observing as under : "4. We have heard the parties, and perused the material on record. The payment to the payee, Sangeeta Choudhary, even as clarified before the assessing authority, was for sales and marketing support outside India. No part of the services, toward which payment had been made to her, was rendered in India; the payee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or section 194LD or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries" shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode; Provided further that no suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, titled 'collection and recovery of tax'. As explained therein, the Act forms one integrated code, and the charging sections cannot be read de hors the machinery sections. Due weight has to be given to every word in the section. The interpretation by the Revenue was, in its view, guided more by administrative convenience, and which would though imply deduction of tax even on payments qua which there was no territorial nexus with India or otherwise were not chargeable to tax in India. Administrative considerations could not be the basis of the interpretation of the statutory provisions, even as the law contemplates adequate safeguards in the form of section 40(a)(i) and section 195(6); the latter being inserted on the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Breaking Corpn. v. CIT[2009] 314 ITR 309/[2008] 175 Taxman 77 (SC) and, rather Transmission Corpn. of A.P. Ltd. (supra) as well, squarely covers the facts of the instant case. The Revenue, to enable us to disturb the like finding by the ld. CIT(A), ought to have explained as to how it is infirm or does not amount to a correct reading of the said decision, or is otherwise not applicable in the facts of the case. In fact, the assessee having admittedly neither deducted tax at source nor made any application u/s.195(2) to the A.O., on the footing that no part of the relevant payment represents income chargeable to tax in India, the Revenue ought to, in our view, have impugned the said basis, on which the assessee's case rests. And which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business or business connection or otherwise any presence whatsoever in India. In the present case, the edifice of the assessee's case is the rendering of the services outside India. Therefore, though for a consideration for marketing and sale support services and, thus, only in the nature of commission or service charges, the same has no nexus with India. All that, in our clear view, the said Explanation does is to remove the issue of the determination of the tax incidence on the basis of whether the payee is a tax resident in India from being a consideration for non-deduction of tax at source u/s.195. The payee in the instant case, being admittedly a resident of Canada, with the services being rendered thereat, the issue of place ..... X X X X Extracts X X X X X X X X Extracts X X X X
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