ACIT., CIRCLE-1, AGRA V. M/S DAWAR FOODWEAR INDUSTRIES, , AGRA

ITA 433/AGR/2015

AI Insights

The case involves the Income Tax Department's appeal against the decision of the CIT(A) which had deleted the disallowance made by the Assessing Officer on foreign commission payments and sample and development charges paid by M/s. Dawar Footwear Industries to non-resident entities. The primary legal issue was whether the payments made to foreign agents and for sample designs were subject to TDS under section 195 of the Income Tax Act. The CIT(A) had ruled in favor of the assessee, citing that the foreign agents had no permanent establishment in India and no part of their services was rendered in India, referencing decisions from the Delhi and Madras High Courts. The Tribunal agreed with the CIT(A)'s decision, affirming that the payments were not subject to TDS as per the legal precedents cited.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126449 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Other Referred Cases: EON Technology Pvt. Ltd. (343 ITR 366), Faizan Shoes Pvt. Ltd. (48 Taxmann.com 48), Metro & Metro (39 Taxmann.com26)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR YADAV LD.
• Assessee Lawyers: RAJENDRA SHARMA; LD
• Keywords: TDS; Permanent establishment; Dismissed; Commissioner; Commissioner of Income Tax; AMP; Deleted; Impossibility of performance; Services
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No. 433/Agr/2015 (िनधा \u000fरणवष\u000f / Assessment Year:2010-11) ACIT-Circle-1, Agra. बनाम/ Vs. M/s. Dawar Footwear Industries 53, T.P. Nagar, Agra. \u0002थायीलेखासं./जीआइआरसं./PAN/GIR No. AAAFD-6003-E (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ कीओरसे/ Appellant by : Dr. Arun Kumar Yadav – Ld. CIT-DR थ कीओरसे/Respondent by : Sh. Rajendra Sharma, Adv. – Ld. AR सुनवाईकीतारीख/Date of Hearing : 19-02-2025 घोषणाकीतारीख /Date of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeals by revenue for Assessment Year (AY) 2010-11 arises out of an order passed by learned Commissioner of Income Tax (Appeals)-I, Agra [CIT(A)] on 31-03-2015 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 18-03- 2013. Both sides made vehement arguments. Having heard rival submissions and upon perusal of case records, the appeal is disposed- off as under. The sole grievance of the revenue is deletion of disallowance u/s 40(a)(i) against foreign commission payments and sample and development charges as paid by the assessee to non- resident entities. The assessee derived income from manufacturing and trading of footwear. 2 2. The assessee paid commission to non-resident agents for export orders. No tax was deducted against the same on the ground that the payment was not for managerial and technical services. No part of services was rendered in India. None of the payee was stated to be having any permanent establishment in India. However, Ld. AO made disallowance u/s 40(a)(i) for Rs.288.47 Lacs. The assessee also paid sample design development expenses to foreign parties which was similarly disallowed for Rs.36.15 Lacs. 3. The Ld. CIT(A), inter-alia, relied on the decision of Hon’ble Delhi High Court in the case of EON Technology Pvt. Ltd. (343 ITR 366) as well as the decision of Hon’ble High Court of Madras in the case of Faizan Shoes Pvt. Ltd. (48 Taxmann.com 48) to hold that where foreign agents had no PE in India, no part of their services would be rendered in India and therefore, there would be no obligation to deduct TDS u/s 195. On the issue of sample charges, it was held that when the payment was made, the amendment made below Sec.9 by Finance Act, 2010 was not in statute and therefore, there was impossibility of performance as held by Agra bench of Tribunal in the case of Metro & Metro (39 Taxmann.com26).Accordingly, the impugned disallowances were deleted against which the revenue is in further appeal before us. 4. It could very well be seen that the adjudication of Ld. CIT(A) is based on binding judicial precedents. No contrary decision has been shown to us. This being the case, we confirm impugned order, on both the issues. 3 5. The appeal stands dismissed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) 3ा ियक सद4 /JUDICIAL MEMBER लेखा सद4 /ACCOUNTANT MEMBER Dated: 22.04.2025 आदेश की 6ितिलिप अ8ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु3/CIT 4. िवभागीय ितिनिध/DR 5. गाड9फाईल/GF ASSISTANT REGISTRAR ITAT AGRA "