ACIT, CIRCLE-10(2), NEW DELHI vs. GRAZIANO TRANSMISSION INDIA PVT. LTD., NEW DELHI

ORDER Per L.P. Sahu, A.M.: These two appeals are filed by the Revenue against separate orders of ld. CIT(A)-35, New Delhi for the assessment years 2012-13 and 2013-14 respectively. In both these appeals the grounds raised by Revenue are common barring the amount of disallowance. Hence, both the appeals, having common issue, were heard together and are being disposed of by this consolidated order. The solitary ground raised in appeal for A.Y. 2012-13 read as under :

“1. Whether on the facts and circumstances of the case in law ld. CIT(A) is correct in deleting the disallowance of Rs.1,47,04,728/- made on account of non-deduction of TDS on the payment made to M/s. Graziano

Transmission North America USA and Oerlikon Graziano Spa, Italy (SPA) holding the same as commission ignoring the fact that the payment is actually in the nature of fee for technical services and the assessee only named the same as commission.”

thereto the assessee company did not file any reply. Therefore, as per the provisions of the Act and in accordance with judicial pronouncement on the issue in dispute, the AO observed that assessee was liable to deduct TDS on export commission of Rs. 89,91,816 paid to non-resident / outsiders. Since assessee did not deduct the TDS as per provision of the section 195 of the Act, therefore, total deduction of expenditure of Rs. 88,91,816/- on export commission, as claimed by assessee, was disallowed and added back to the taxable income of the assessee for the AY 2010-11. Accordingly, the AO assessed the income of the assessee at Rs. 22,10,20,170/- u/s.143(3) of the Act dated 28.2.2014. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 04.2.2016 has allowed the appeal of the assessee. Aggrieved with the impugned order, Revenue is in appeal before the Tribunal.”

Findings: “5.2 As regards ground no. 2 relating to disallowance of Rs. 88,91,816/- is concerned, after perusing the duties and obligations as mentioned at page no. 44 to 46 of the impugned order, we find that the agent is not providing any technical services to the assessee. The agent is acting only commission agent and procuring the orders for the assessee and to inform the assessee for any infringement of rights. Even if the same is considered as business income of the commission agent same is not taxable in India as the foreign entity does not have any PE or BC in India. The commission is being entertained in the foreign company in the foreign country. No part of its income accrue or arise in India. Nor it is making available any technical knowledge, experience, skill, knowhow etc. to the assessee. Hence, Ld. CIT(A) has rightly held that the case of the assessee is identical to the decision of the Hon’ble Delhi High Court in the case of DIT vs. Guy Carpenter and Company Ltd. (ITA No. 202/2012)- Hon’ble Delhi High Court and the ITAT, Hyderabad and deleted the addition of Rs. 88,91,816/- . In view of above, we are of the considered view that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground no. 2 raised by the Revenue.”