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TMI Blog2017 (11) TMI 1844X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case on hand cannot be considered as being accrued or arisen or deemed to accrue or arise in India as the services were rendered outside India and the commission was also paid outside India. We also hold that in the absence of permanent establishment of A V Sons in India, the income of the said agent is not exigible to tax in India. Therefore, the assessee was not obliged to effect any deduction of tax on the commission payment to the agent A V Sons , who is stationed outside India. We, therefore, reverse the findings of the authorities below in this regard and allow the grounds raised in the appeal by the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... come was determined at ₹ 28,38,19,248; which included the disallowance of commission payment of ₹ 23,04,348 to the nonresident entity ''A V & Sons' '. 2.2 Aggrieved by the order of assessment for Assessment Year 2010-11 dt.3.3.2014, the assessee preferred an appeal before the CIT (Appeals). The appeal was dismissed by learned CIT (Appeals) vide order dt.16.9.2016; holding that the payment of commission to non-resident is taxable in India in view of the provisions of Sec. 9(1)(i) of the Act. 3.1 The assessee, being aggrieved by the order of CIT (Appeals) dt.16.9.2016 for Assessment Year 2010-11, has filed this appeal before the Tribunal, wherein it has raised the following grounds :- 3.2 The learned Authorised Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to non-residents is taxable in India in terms of provisions of Section 9(1)(i) of the Act. 3.4 In rejoinder to the learned Departmental Representative's contentions, the learned Authorised Representative submitted that the withdrawal of the Circular 23 of 1969 does not necessarily mean that a non-resident would be now be liable to tax in India automatically. The taxability of a non-resident under the Act would need to be evaluated, independent of the position stated in the Circulars, having regard to the provisions of the Act and the relevant judicial pronouncements. In this regard reliance was placed on the decision of the co-ordinate bench of this Tribunal in the case of Exotic Fruits Pvt. Ltd. (supra) wherein at para 7.5 thereof it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccrue or arise in India as the services of such agents, as asserted by the assessee, were rendered / utilised outside India and the commission was also paid outside India. Further, in the absence of permanent establishment(s) of such agents in India, the incomes of the said agents were NOT liable to be taxed in India and, as such, the assessee was not obliged to effect any deduction of tax on the commission payments made to the agents who were positioned overseas." 3.5.2 In the case of Puma Sports India Pvt. Ltd. (supra), the coordinate bench of this Tribunal, on similar facts as in the case on hand, following the aforesaid decision of another co-ordinate bench in the case of Exotic Fruits (P) Ltd. (supra), at para 7 of its order held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f placing the orders with manufacturers. Therefore, respectfully following this tribunal order, we hold that TDS is not deductible from commission payment to foreign agent. Regarding the Explanation inserted by Finance Act, 2010 w.r.e.f. 01.06.1976 below section 9 (2), we would like to observe that this tribunal order is dated 04.10.2012 i.e. after insertion of this explanation and therefore, it cannot be said that there is any change in law after this tribunal order." 3.5.3 Respectfully following the decisions of the co-ordinate bench of this Tribunal in the cases of Exotic Fruits (P) Ltd (supra); and Puma Sports India Pvt. Ltd. (supra); we also hold that the income of the non-resident, 'A V & Sons' by way of payment of commission in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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