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TMI Blog2016 (4) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted a default in not deducting the tax at source. We find that the Commissioner of Income Tax (Appeals) has given a finding that the services of non-resident sales agents namely Mitsui Co. Ltd. and Allied Ore Inc, Japan, are performed outside India and the same are not taxable in India, hence, TDS is not deductable from the payments made to them. This finding of fact by the Commissioner of Income Tax (Appeals) is not disputed by the Revenue before us.Therefore, this issue stands covered by the decision of the Hon ble Bombay High Court in the case of Gujarat Reclaim Rubber Products Ltd. [ 2015 (12) TMI 1078 - BOMBAY HIGH COURT ] - Decided against revenue. - ITA No. 267/PAN/2015 - - - Dated:- 27-4-2016 - Shri N.S. Saini, Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment to the foreign agents was for the purpose of business and commercial expediency, however regarding non-deduction of TDS, applicability of the provisions of sec. 40(a)(ia), the Tribunal held that the provisions of sec. 195 has been amended by the introduction of Explanation-II to the said section by the Finance Act, 2012 with retrospective effect from 01/04/1992, whereby it is clarified that the obligation to comply with sub-sec. (1) and to make deduction there under applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non-resident person has (i) a residence or place of business or business connection in India; or (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Hon ble Bombay High Court in the case of Gujarat Reclaim Rubber Products Ltd. (supra), wherein it was held as under:- 5. Re:- Question (a): (a) For the subject Assessment Year, the Respondent-Assessee had during two Assessment Years made payment of commission to non-resident agent in respect of sales made outside India. The Assessing Officer in both the Assessment Years passed an order disallowing the payments made to non-resident agent under Section 40(a) (i) of the Act for failure to deduct tax at source. The basis of both the Assessment Order disallowing the expenditure is in view of the fact that the Circular No. 23 of 1969 and 786 of 2000 issued by the CBDT which had clarified that commission paid to non-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an Appeal to the Tribunal from the order of CIT(A). In respect of the order of CIT(A) for Assessment Year 2007-08 - Respondent-Assessee s filed an appeal, while in respect of order of the CIT(A) for the Assessment Year 2008-09 - Revenue has filed Appeal; (e) By the common Impugned order, the Tribunal after considering submissions places reliance upon the decision of its Co-ordinate Bench in Armayesh Global v/s. ACIT, 50 SOT 564, the Delhi High Court in CIT vs. Eon 366 ad the reasons recorded by the CIT(A) in his order for the Assessment Year 2008-09 to conclude that of non-resident commission agent cannot be as income arising or accruing in India of Section 40(a)(i) would have no Assessment Years under consideration; (f) The gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commission earned by the non-resident agent who carried on the business of selling Indian goods outside India, cannot be said have deemed to be, income which has accrued and/or arisen in India. This view of that CIT(A) for Assessment Year 2008-09 was found acceptable by the Tribunal in its impugned order and applied the same even for Assessment Year 2007-08. In view of the fact that the issue stands concluded in favour of the Respondent-Assessee by the decision of the Supreme Court in Toshoku Ltd. (supra). The Revenue has not shown any change in the law in the subject Assessment Years which would warrant our not following the Apex Court s decision; (h) Moreover, we find CBDT Circular No.23 of 1969 has been reproduced - in the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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