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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2013-14 in the matter of order passed u/s.143(3) of the IT Act. 2. In this appeal, assessee is aggrieved for disallowance made by AO u/s.40(a)(i) in respect of commission of Rs.16,70,972/- paid to non-residents. 3. Rival contentions have been heard and record perused. 4. Commission paid to non-residents were disallowed by the AO by applying provisions u/s. 40(a)(i). By the impugned order CIT(A) confirmed the action of the AO by relying on the decision of ITAT, Panaji Bench in case of Sesa Resources Ltd., 5. I have considered rival contentions and carefully gone through the orders of the authorities below.
M/s. Refrigerated Distributors Pvt. Ltd., 6. There is no dispute to the fact that commission was paid to non-residents for procuring export orders, therefore, no income arises in India as the entire services were rendered outside India, hence, no tax was deducted at source by the assessee in respect of the payment of commission. The issue under consideration is squarely covered by the Bombay High Court in case of Gujarat Reclaim and Rubber Products Ltd., 383 ITR 236 (Bombay), wherein it has been clearly held that no tax is required to be deducted on the commission paid to foreign agents since the said income does not accrue or arise in India.
I also found that reliance placed by the AO on the Panaji Bench decision in the case of Sesa Resources Ltd., (supra) is erroneous in so far as said order of the Tribunal was set aside by the Bombay High Court in Sesa Resources Ltd., 287 CTR 89 reminding the matter back to the Tribunal to examine the aspect in light of the judgment of Bombay High Court in case of Gujarat Reclaim and Rubber Products Ltd.,(supra). Accordingly, we set aside the order and allow the appeal in favour of the assessee.