Asstt. CIT v. Farida Shoes (P.) Ltd.

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The Tax Publishers2013 TaxPub(DT) 1917 (Chen-Trib) : (2013) 053 (II) ITCL 0578 : (2013) 143 ITD 0400 Income Tax Act, 1961 --Tax deduction at source--Under section 195 Non-deduction of TDS from commission paid to overseas agents--During the course of assessment proceedings, assessing officer had observed that the assessee had made certain payments as overseas agencies commission and that the assessee had not deducted TDS on those payments under section 195. Assessee contended that the commission payment was not earned directly or indirectly, through or from any business connection in India and hence, it would not be taxable in India and no TDS was required. However, assessing officer did not agreed and observed that the business of the assessee was situated in India and the payments were also made from India and the assessee's case was not covered for exception provided under section 9(1)(vi)(b)/9(1)(vii)(b), therefore, he disallowed assessee's claim of business expenditure under section 40(a)(i). Held: Was not justified as the assessee paid certain amounts to overseas agents for procurement of export orders and agents had not provided any managerial/technical services, therefore, the payments received by the non-resident India were not taxable in India. Income Tax Act, 1961 Sections 195, 9 In The ITAT, Chennai a Bench N. S. Saini, A.M. & V. Durga Rao, J.M. Asstt. CIT v. Farida Shoes (P.) Ltd. IT Appeal Nos. 359 & 360 (Mds.) of 2013 A.Y. 2008-09 11 April, 2013 Appellant by : N. T. Madhavan Respondent by : S. Rifaur Rahman ORDER *V. Durga Rao, J.M.* These two Revenues appeals in the case of different assessees are directed against separate orders of the Commissioner (Appeals) IX Chennai both dated 27-11-2012 in ITA Nos. 80/11-12/A.IX and 89/11-12/A.IX; respectively, for assessment year 2008-09, in proceedings under section 143(3) of the Income Tax Act 1961 (in short the 'Act'). As common issues are involved in these two appeals filed by the Revenue, they were heard together and are being disposed of by this common order for the sake of convenience. ITA No. 359/Mds/2013 : 2. The only issue raised by the Revenue is that the Commissioner (Appeals) has erred in deleting the disallowance under section 40(a)(i) of the Act to the extent of Rs. 5.61 crores holding that the assessee is not liable to deduct at source on the overseas commission payments made to the non-resident under section 195(2) of the Act by relying upon the decision of the Honble Apex Court in the case of Transmission Corpn. of Andhra Pradesh v. CIT 1999 TaxPub(DT) 1403 (SC) : (1999) 239 ITR 587 (SC). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1917 (Chen-Trib) : (2013) 053 (II) ITCL 0578 : (2013) 143 ITD 0400

Income Tax Act, 1961

--Tax deduction at source--Under section 195 Non-deduction of TDS from commission paid to overseas agents--During the course of assessment proceedings, assessing officer had observed that the assessee had made certain payments as overseas agencies commission and that the assessee had not deducted TDS on those payments under section 195. Assessee contended that the commission payment was not earned directly or indirectly, through or from any business connection in India and hence, it would not be taxable in India and no TDS was required. However, assessing officer did not agreed and observed that the business of the assessee was situated in India and the payments were also made from India and the assessee's case was not covered for exception provided under section 9(1)(vi)(b)/9(1)(vii)(b), therefore, he disallowed assessee's claim of business expenditure under section 40(a)(i). Held: Was not justified as the assessee paid certain amounts to overseas agents for procurement of export orders and agents had not provided any managerial/technical services, therefore, the payments received by the non-resident India were not taxable in India.

Income Tax Act, 1961 Sections 195, 9

In The ITAT, Chennai a Bench

N. S. Saini, A.M. & V. Durga Rao, J.M.

Asstt. CIT v. Farida Shoes (P.) Ltd.

IT Appeal Nos. 359 & 360 (Mds.) of 2013

A.Y. 2008-09

11 April, 2013

Appellant by : N. T. Madhavan

Respondent by : S. Rifaur Rahman

ORDER

V. Durga Rao, J.M.

These two Revenues appeals in the case of different assessees are directed against separate orders of the Commissioner (Appeals) IX Chennai both dated 27-11-2012 in ITA Nos. 80/11-12/A.IX and 89/11-12/A.IX; respectively, for assessment year 2008-09, in proceedings under section 143(3) of the Income Tax Act 1961 (in short the 'Act'). As common issues are involved in these two appeals filed by the Revenue, they were heard together and are being disposed of by this common order for the sake of convenience.

ITA No. 359/Mds/2013 :

2. The only issue raised by the Revenue is that the Commissioner (Appeals) has erred in deleting the disallowance under section 40(a)(i) of the Act to the extent of Rs. 5.61 crores holding that the assessee is not liable to deduct at source on the overseas commission payments made to the non-resident under section 195(2) of the Act by relying upon the decision of the Honble Apex Court in the case of Transmission Corpn. of Andhra Pradesh v. CIT 1999 TaxPub(DT) 1403 (SC) : (1999) 239 ITR 587 (SC).