9911796707
TMI Blog2018 (6) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... raves your leave to add, alter, modify, delete or amend any of the above mentioned grounds of appeal. 3. The issue raised in the first Ground of appeal is against the confirmation of disallowance in respect of advertisement expenditure of Rs. 93,50,396/- and professional and consultancy fee of Rs. 14,47,396/- by CIT(A) as made by the AO u/s.40(a)(i) of the Act by ignoring the facts that these payments were made by the assessee for the services rendered outside India to non-residents. 4. The facts in brief are that during the course of assessment proceedings, AO observed that assessee has incurred expenses of Rs. 93,50,396/- on advertisement in foreign magazines and websites on which no tax has been deducted at source and accordingly issued a show-cause notice as to why the said expenses should not be disallowed u/s.40(a)(i) of the Act. The assessee replied the show-cause notice vide letter dated 22/11/2010 by submitting that advertisement expenditure was incurred in connection with the advertisements in foreign magazines and websites and the recipients were not having permanent establishment / business connection in India and thus no tax at source was required to be deducted at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement is not the news and it was not only for transmission out of India but it is also available in India. Hence in my opinion section 9(l)(i) is applicable in the present case. The appellant has also submitted that in view of section 9(l)(vi)( b the payment made by resident in India for the services utilised in the business or profession carried out outside India , the deeming provision is not attracted. But, in the instant case, services are available in India and it was also recorded by the Assessing officer. Accordingly Section 9(l)(vi) i also attracted for payment of professional fees. In view of the above, section 195 is applicable in the instant case and is also read as under for ready reference : 195. ^[(1) ^Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest 37[***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries"38(***]) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Counsel submitted that no one in India or in Asia and other continents other than Europe can place the order on net for these garments. It is the only people living in UK and Europe can place the order and take the delivery of the garments. The said brand is registered in UK under trade name of "Cyber Jammies" and it is not disputed that assessee has business outside India. 7. Learned AR submitted that all these recipients, news paper agencies, publishing houses have no permanent place in India and they are all foreign companies which are non-resident as per the provisions of the Act and services of advertisement were rendered by these entities outside India and therefore, the income of the publishing houses are not chargeable to tax in India and consequently no tax is required to be deducted at source. Learned Counsel also referred to the copies of advertisement in respect of Cyber Jammies garments in foreign magazines as placed in the paper book. In respect of the disallowance of Rs. 14,47,091/-, learned Counsel submitted that the said payment was made to foreign national for obtaining consultancy in UK in respect of registration of trade mark of Cyber Jammies in UK as Pic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) also noted that assessee has not made any application u/s.195(2) of the Act and therefore, the tax must be deducted u/s.195(1) of the Act. However, on the perusal of Rule 37BB which in respect of furnishing of information for payments in foreign currency made to non-residents not being a company or to a foreign company the provisions of 195(6) are effective w.e.f. 01/07/2009. Accordingly, the form No.15 CA and 15CB were not required to be given in respect of payments to non-resident Indians for the current year. 10. Considering the facts of the assessee in light of the above discussion , we are of the view that no TDS is required to be deducted on the payment of advertisement expenses and technical and professional charges to foreign national as these recipients were foreign residents having no PE in India and the services were also rendered by them outside India. We, therefore , set aside the order of CIT(A) by holding that no tax at source is required to be deducted at source. The AO is directed accordingly. 11. The issue raised in second Ground of appeal is against the confirmation of disallowance of Rs. 590,654/- by CIT(A) as made by the AO u/s.14A of the IT Act. 12. Facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
