DCIT, NEW DELHI vs. M/S. STERLING ORNAMENTS (P) LTD., NEW DELHI

order to determine whether the income could be deemed to accrue or arise in India, section 9 of the Act is the basis.

The taxpayer paid commission to non-resident agents for services rendered outside India.

The taxpayer had not deducted tax on these payments on the ground that the overseas agents operated in their own country and no part of their income had accrued in India".

Keeping in view of the above facts and following the case laws cited above, I am of the opinion that the assessee company is not liable to deduct tax at source. Hence, the appeal is allowed on these grounds.

In result the appeal of the assessee is allowed.”

7.1 After perusing the aforesaid finding of the Ld. CIT(A) for the assessment year 2009-10 in assessee’s own case, we find that the issue involved in the assessment year i.e. 2011-12 is squarely covered by the Ld. CIT(A)’s order dated 12.6.2012 passed in assessment year 2009-10 in assessee’s own case as the facts and circumstances are similar and therefore, the Ld. CIT(A) has followed the same precedence in the assessment year 2011-12 and rightly allowed the appeal of the assessee by deleting the addition in dispute. We further find that Ld. CIT(A) in the assessment year 2009-10 has respectfully followed the following decisions:-

1) DCIT vs. Divi's Laboratories Ltd reported in 2011 TII 182 (2011) 12 Taxmann. Com 103, 2) Eon Technologies (P) Ltd vs. DCIT 11 Taxmann.com 53 (Del). 3) Hon'ble ITAT Chennai Bench in the case of DCIT vs. M/s Mainetti (India) p. Ltd. 138/20, Florida Towers, 3rd Floor, Chennai.

7.2 We also find that on the anvil of the following decisions, the assessee is not liable to deduct tax at source:- i) Decision of the Coordinate Bench of ITAT in the case of DCIT (International

Taxation), Ahmedabad vs. Welspun

Corporation Ltd. (2017) 77 taxmann.com

165, wherein it was observed (Heads Note only) that payments made by assessee for services rendered by non-resident agents could not be held to be fees for payment for technical services, these payments were in nature of commission earned from services rendered outside

India which had no tax implications in India. ii) Decision of Hon’ble Madras High Court in Ltd. (2014) 369 ITR 96 wherein it was held that the services rendered by the non-resident agent could at best be called as a service for completion of the export commitment and would not fall within the definition of “fees for technical services” and, therefore, section 9 was not applicable and, consequently, section 195 did not come into play. Therefore, the disallowance made by the AO towards export commission paid by the assessee to the non-resident was rightly deleted. iii) Hon’ble Allahabad High Court in the case of CIT vs. Model Exims (2014) 363 ITR 66

(All.) has observed (Heads Notes) that Business Expenditure – Disallowance –

Payments to non-resident – Failure to deduct tax at source – Assessee’s agents had their own offices in foreign country –

Agreement for procuring orders not involving any managerial services – Explanation to Section (2) not applicable – No disallowance of commission payments can be made – Income Tax Act,

1961 ss. 9(1)(vii), 40(a)(i), 195. iv) Decision of Hon’ble Delhi High Court in the case of CIT vs. EON Technology P.

Ltd. 343 ITR 366 (Del.) wherein it has been held that non-resident commission agents based outside India rendering services of procuring orders cannot be said to have a business connection in India and the commission payments to them cannot be said to have been either accrued or arisen in India. v) Decision of Delhi ITAT in the case of Divya Creation vs. CIT (2017) 86 taxmann.com 276 wherein it has been observed that (Heads Note) where assessee-firm made payments of commission to those agents, since those agents had their offices situated abroad and, moreover, services were also rendered by them outside India, assessee was not required to deduct tax at source while making payments in question.

7.3 In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, we hold that assessee company is not liable to deduct tax at source, hence, we uphold the order of the Ld. CIT(A) on this issue in dispute and dismiss the grounds raised by the Revenue.

Order pronounced on 27/06/2018.