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TMI Blog2019 (5) TMI 1679X X X X Extracts X X X X X X X X Extracts X X X X ..... non-resident has to be considered in the light of the provisions of DTAA between India and the Country of the non-resident. In the absence of P.E. of the non-resident in India such business income is not chargeable to tax in India. Accordingly, in the facts and circumstances of the case when the amount paid by the assessee is not chargeable to tax in India then the assessee is not liable to deduct TDS and consequently the provisions of Section 40(a)(i) of the Act cannot be invoked for making the disallowance. In the facts and circumstances of the case the disallowance made by the AO U/s 40(a)(i) of the Act is deleted. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... that the payment of commission to non-resident is not chargeable to tax in India and consequently the assessee was not liable to deduct tax on such amount. Therefore, the provisions of Section 40(a)(i) of the Act cannot be invoked in the case of the assessee. He has relied upon a series of decisions and submitted that the courts have consistently held that the payment of commission to non-resident is not liable to tax in India when the non-resident has no P.E. in India. He has referred to the order of the ld. CIT(A) for the assessment year 2013-14 and submitted that the ld. CIT(A) has deleted an identical disallowance made by the AO by following decision of Hon'ble Delhi High Court in case of CIT vs. EON Technologies (P) Ltd. 343 ITR 366 as well as the decision of Mumbai Benches of the Tribunal in case of Armayesh Global vs. ACIT 51 SOT 564. The ld. AR has also relied upon the following decisions:- • CIT vs. Fluidtherm Technology (P) Ltd. (2015 Taxman.com 87 (Madras). • CIT vs. Faizan Shoes (P) Ltd. 367 ITR 155. • CIT vs. Gujarat Reclaim Rubber Products (P) Ltd. ( Mumbai High Court.) • CIT vs. Toshuku Ltd. 125 ITR 525(SC) • CIT vs. Sea Resou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the head "Profits and gains of business or profession",- (a) in the case of any assessee- 42[(i)43 44any 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; or (B) in India to a non-resident, not being a company or to a foreign company, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid 45[on or before the due date specified in sub-section (1) of section 139] : 46[Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.] Explanation.-For the purposes of this sub-clause,- (A) "royalty" shall have the same meaning as in Explanation2 to clause (vi) of sub-section (1) of section 9; (B) "fees for technical services& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable to these payments" the A/R of the appellant was specifically requested to clarify whether any ruling was obtained from the Authority for Advance Ruling u/s 245(2), regarding non taxability of the income of the recipient in India under the Income Tax Act. The A/R submitted that no such ruling was obtained from AAR by the recipients of the above referred expenses. There is no other evidence on record to show that the sum received by the nonresidents in the form of selling commission (₹ 38,92,787/-) was not chargeable to tax under the Income Tax Act. There is no order or finding by any Income Tax Authority that the above referred sum of ₹ 38,92,787/- was not chargeable to tax under I. T. Act, 1961. Therefore, I am of the considered view that the appellant was required to deduct tax at source while making payment of selling commission ( ₹ 38,92,787/-) to non-resident, whether or not the non-resident had a residence or place of business or business connection in India. The decision relied upon by the appellant are applicable only when there is evidence on record to show that the sum paid by the assessee was not chargeable to tax under the Income Tax Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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