DCIT CIR 1, KALYAN vs. INDO AMINES LTD, MUMBAI

On the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding that provisions of Sec. 195 are not applicable and consequently no disallowance u/s. 40(a)(i) could be made and while doing so the CIT(A) has failed to consider the ratio of the decision of the Supreme Court in the case of Transmission Corpn. of A.P. Vs. CIT 239 ITR 587.” 3.1 At the outset of the hearing the learned A.R. of the assessee submitted that in the assessee’s own case for A.Y. 2009-10, wherein similar/identical grounds were preferred, Revenue’s appeal was dismissed by a Coordinate Bench of the Tribunal vide its order in IT No. 3664/Mum/2013 dated 18.12.2005. It was prayed that since the issues in appeals (supra) are identical and the same are covered in favour of the assessee, Revenue’s appeals for both assessment years are liable to be dismissed. The learned D.R. fairly conceded that the issues in appeal are covered in favour of the assessee and against the Revenue by the aforesaid decision of the Coordinate Bench in the assessee’s own case for A.Y. 2009-10. 3.2.1 We have heard both the parties in the matter and perused and carefully considered the material on record, including the judicial pronouncements cited. We find that the identical issues to those raised in both Revenue’s appeal for assessment years 2010-11 and 2011-12 (supra) were raised by Revenue and considered and adjudicated upon by a Coordinate Bench of the Tribunal in the assessee’s own case for A.Y. 2009- 10. In its order in ITA No. 3664/Mum/2013 dated 18.12.2015, the Coordinate Bench has decided the issue in favour of the assessee and against Revenue; holding as under at paras 3.1 to 3.4 thereof: - 3.1. We have heard both the parties and gone through the orders of lower authorities, material placed before us as well as judgments placed before us on this issue. The brief facts are that the assessee company was engaged in the business of manufacturing and sale of chemicals during the year under consideration. During the course of assessment proceedings, it was noted by assessee that the assessee had paid commission to non-resident persons for export sales but did not deduct TDS upon these payments as envisaged u/s 195 of the Act. In reply, the assessee stated that the assessee was not required to deduct TDS on the amount of commission paid to non- resident as neither any services were rendered in India nor the non-resident agent provided any managerial or technical services. The assessee submitted list of exports sales on which commission was paid and 3 & 3039/Mum/2015 M/s. Indo Amines Ltd. copies of agent agreements. From these details, it is noted that commission has been paid to various parties located in the different countries all over the world. From the agency agreements, it is noted by us that the role of agent was to locate different customers for the assessee who were interested in purchasing products of the assessee company and promote the products of the assessee company into European markets. It is further noted that for this purpose commission was payable by the assessee to these agents on a pre-decided fixed percentage on the amount of exports sales done by the assessee company with the help of concerned agents. It is further noted that no as per terms of the agreement, no service was to be provided in India. As per facts brought before us, no services were provided in India by these non-resident agents. It is further noted from the perusal of these agreements that no material or technical services were provided by the agent to the assessee company. 3.2. During the course of hearing, nothing has been brought before us by the Ld. DR to controvert these facts. We find that position of law in the aforesaid facts is well settled. It has been held in various judgments that the TDS is not required to be deducted as per law on the payments made to foreign agents for the procurement of sales order, in the given facts. It is noted that the Ld. Counsel has rightly placed reliance upon the judgment of Hon’ble Madras High Court in the case of CIT vs. Faizan Shoes Pvt. Ltd. (supra) wherein Hon’ble High Court considered the position of law in detailed manner and also various amendments made in the law time to time and also considered the judgments of Hon’ble Supreme Court in the case of CIT vs. Toshoku Ltd. 125 ITR 526 (SC) and held that: “Where the assessee simply paid a commission simpliciter to non-resident agent outside India for procuring export orders from overseas buyers and the non-resident agent did not provide any technical services for purpose of running business of assessee in India, Assessee was not liable to deduct tax on source on such commission paid.” 3.3. We further find that similar view has been taken in the judgments relied upon by Ld. CIT(A) in his order. It is further noted that Hon’ble Delhi High Court in the case of CIT vs EON Technology Pvt Ltd 343 ITR 366 has taken a similar view after considering various aspect connected with this issue. It is further noted that Revenue has relied upon in its grounds, judgment of Hon’ble Supreme Court in the case of Transmission Corporation of A.P. Ltd. vs CIT 239 ITR 58. It is noted that this judgment has been considered and distinguished in detail by Hon’ble Madras High Court in the case of Faizan Shoes Pvt. Ltd. (supra). No other contrary judgment has been brought to our notice. 3.4. Therefore, keeping in view the facts of this case and well settled position of law as discussed above, we find that Ld. CIT(A) has righty held that assessee was not required to deducted tax at source while