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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI B.R. BASKARAN & SHRI VIKAS AWASTHY
आदेश / O R D E R
PER B.R. BASKARAN, ACCOUNTANT MEMBER
The Revenue has filed this appeal challenging the order dated 23.07.2014 passed by learned Commissioner of Income Tax (Appeals)- I, Coimbatore which relates to assessment year 2010-2011.
I.T.A.No.2491 /Mds/2014 :- 2 -: . 2. None appeared on behalf of the assessee. The assessee has moved a petition seeking adjournment of the matter. However, we noticed that the learned Commissioner of Income Tax (Appeals) has followed the decisions rendered by the Co-ordinate Benches of the Tribunal on the disputed issue. Hence, we rejected the adjournment request and proceeded to dispose of the appeal after hearing the learned Departmental Representative.
We have heard the learned Departmental Representative and perused the records. The assessee had paid a sum of �42,77,097/- as overseas commission and did not deduct tax at source thereon.
Hence, the Assessing Officer disallowed the said claim by invoking provision u/s. 40(a)(i) of the Act. The learned Commissioner of Income Tax (Appeals) however, allowed the claim of the assessee and hence the Revenue has filed this appeal before us.
We noticed that the learned Commissioner of Income Tax (Appeals) has followed the decisions rendered by Co-ordinate Benches on identical issue and accordingly deleted the addition. For the sake of convenience, we extract the following operative positions of the order of the learned Commissioner of Income Tax (Appeals).
‘’6. I have gone through the submissions made by the appellant I.T.A.No.2491 /Mds/2014 :- 3 -: . and also the order of the Assessing Officer. The Assessing Officer held that the activity carried on by the Agent on behalf of the appellant as per the Agreement, based on the provisions of Income Tax Act, 1921 u/s.9(1)(vii) should be considered as fee for “technical services’’ within the definition specified in the Act. Further, the Assessing Officer held that in the light of the insertion of Explanation below Section 9(2), the payment would be treated as deemed to have accrued or arisen in India and hence it should be allowed as ‘technical fees’ for which tax is deductible u/s. 195 of the Income Tax Act, 1961.
As seen from the submissions made by the Authorised Representative, the activity of the Overseas Agent is limited to canvassing the sale of products manufacture by the appellant company. The appellant company ahs entered into an Agreement with the Agent, wherein it is stipulated that the Agent is eligible for agency commission of 5% on ex-working value of the contract and that the payment shall be effected in US Dollars. As per the submissions made by the learned Authorised Representative, the Commission Agent does not render any managerial, technical or consultancy services and he does not have the required qualifications in order to render such serves. He has not permanent establishment in India. His business operation of canvassing business is carried on outside India. He is eligible for Sales Commissions of 5% as per the terms of the Agreement. As per the terms of the Agreement and as per the nature of business activity carried on by the Overseas Agent, there is no justification for the Assessing Officer to apply the provisions of Section 9(1)(vii) to the commissioner payment. In the following cases: (i) Armayesh Global Vs ACIT 12(3)[ITAT Mumbai ‘A’ Bench - 21Taxmann 130]. (ii) ITAT Chennai ‘D’ Bench in the case of I.T.O., Co. Ward-II(1) Vs. Faizan Shoes (P) Ltd. (34 Taxmann. com 79)
(iii) ITAT Chennai ‘A’ Bench in the case of ACIT Vs. Farida Shoes (P) Ltd. [34 Taxmann.com 268] (decision of the Co-ordinate Bench of ITAT Chennai in the case of Prakash Impex Vs. Asst. CIT(I.T Appeal No.8/Mds of 2012 dated 03.03.2012.) (iv) ITAT Chennai ‘A’ Bench in the case of DCIT, Company Circle –II(1), Chennai Vs Farida Prima Tannery (P) Ltd-45 Taxmann.com 174.
It is clearly held that where assessee a paid commission to the Overseas Agent for procurement of export orders outside India, it I.T.A.No.2491 /Mds/2014 :- 4 -: . was not chargeable to tax in India as services were rendered outside India. 8. Respectfully following the decision of the Jurisdictional Tribunal cited, I direct the Assessing Officer to allow the claim of Sales Commission to the appellant. The grounds of appeal are allowed.’’
The learned Departmental Representative could not furnish any other contrary decision before us. Hence, we do not find any reason to interfere the order of the learned Commissioner of Income Tax (Appeals). We do follow the decision rendered by the Co-ordinate Benches on the identical issue.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on the 19th day of January, 2015, at Chennai.