Track Shoes (P) Limited, CHENNAI V. ACIT, CHENNAI

CO 37/CHNY/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9822 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G BASKAR
• Assessee Lawyers: C V PAVANA KUMAR
• Keywords: Services rendered outside India; Deemed to accrue or arise in india; Retrospective amendment
• Section: 143(3); 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.541/MDS/2014 & C.O.NO.37/MDS/2014 [ IN ITA NO.541/MDS/2014] ( / ASSESSMENT YEAR: 2009-10) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(2), NEW BLOCK, 4 TH FLOOR, CHENNAI-600 034. VS M/S. TRACK SHOES (P)LTD. 4/287, KUNRAATHUR MAIN ROAD, KOVUR, CHENNAI-602 101. PAN: AAACT3420A ( /APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. C.V.PAVANA KUMAR, JCIT /RESPONDENT BY : MR. G.BASKAR, ADVOCATE / DATE OF HEARING : 12 TH AUGUST, 2014 /DATE OF PRONOUNCEMENT : 26 TH SEPTEMBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD , JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENN AI DATED 15.11.2013 FOR THE ASSESSMENT YEAR 2009-10 A RISING OUT OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPE AL IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN RESTR ICTING DISALLOWANCE UNDER SECTION 40(A)(I) OF THE ACT IN RESPECT OF COMMISSION PAID TO FOREIGN AGENT ON EXPORT SALES. 2 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 2. THE REVENUE CONTENDED THAT THE SERVICES RENDERED BY CALZADOS JOSE AND M.G. DIFFUSION INTERNATIONAL ALS O FALL UNDER FEE FOR TECHNICAL SERVICES AS PER SECTION 9(1 )(VII) OF THE ACT. THE ASSESSING OFFICER WHILE COMPLETING THE ASS ESSMENT DISALLOWED SALES COMMISSION OF ` 82,30,847/- PAID TO FOUR NON-RESIDENT AGENTS AS UNDER:- NAME OF THE PARTY AMOUNT PAID ` `` ` CEC FRANCE 7,43,662 CALZADOS JOSE 37,37,665 MODERN AMUSEMENT 2,35,185 M.G.DIFFUSION INTERNATIONAL 35,14,335 THE ASSESSING OFFICER WAS OF THE VIEW THAT THE AMOU NT PAID BY THE ASSESSEE TO NON-RESIDENT AGENTS IS FEE FOR T ECHNICAL SERVICES AND SINCE THE ASSESSEE DID NOT DEDUCT TDS UNDER SECTION 195 OF THE ACT THE SAID EXPENDITURE IS NOT ALLOWABLE UNDER SECTION 40(A)(I) OF THE ACT. ON APPEAL, COMM ISSIONER OF INCOME TAX (APPEALS) WHILE PARTLY ALLOWING THE A PPEAL SUSTAINED THE DISALLOWANCE IN RESPECT OF CEC FRANCE AND MODERN AMUSEMENT HOLDING THAT THESE PARTIES MIGHT H AVE RENDERED TECHNICAL SERVICES ON THE GROUND THAT THE BUYER AND THE CONSIGNEE ARE PLACED IN DIFFERENT COUNTRIES I. E. AGENT CEC FRANCE AT HONG KONG AND MODERN AMUSEMENT, USA 3 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 IN CANADA. HOWEVER, IN RESPECT OF TWO OTHER FOREIGN AGENTS ARE CONCERNED, THE COMMISSIONER OF INCOME TAX (APPE ALS) DELETED THE DISALLOWANCE FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS. FAIZA N SHOES LTD. IN ITA NO.2095/MDS/2012 DATED 23.4.2013. 3. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ASSESSEE DID NOT DEDUCT TDS ON THE SALES COMMISSION AND THEREFORE ASSESSING OFFICER MADE DISALLOWANCE UNDER SECTION 40(A)(I) OF THE ACT . HE FURTHER SUBMITS THAT THERE WERE NO AGREEMENTS BETWEEN THE ASSESSEE AND THE NON-RESIDEN T AGENTS IN RESPECT OF EXPORT SALES AND IN THE ABSENC E OF ANY SUCH AGREEMENTS IT IS NOT KNOWN AS TO WHETHER THE A SSESSEE HAS PAID SALES COMMISSION OR IT IS FEE PAID FOR TE CHNICAL SERVICES. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN PARTLY DELETING THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER. 4. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSES SEE PAID ONLY SALES COMMISSION BASED ON THE ORDERS PRO CURED BY 4 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 THE NON-RESIDENT AGENTS AND THERE WAS NO AGREEMENT FOR ANY TECHNICAL SERVICES TO BE PROVIDED TO THE ASSESSEE B Y THE NON- RESIDENT AGENTS. COUNSEL SUBMITS THAT SINCE THE ASS ESSEE HAS PAID ONLY EXPORT SALES COMMISSION, THE SAID COM MISSION IS NOT TAXABLE IN INDIA AND THEREFORE PROVISIONS OF SECTION 195 HAVE NO APPLICATION AND IN WHICH CASE DISALLOWANCE UNDER SECTION 40(A)(I) IS NOT WARRANTED. COUNSEL FURTHE R SUBMITS THAT THE DECISION RELIED ON BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF FAIZAN SHOES LTD. (SUP RA) HAS BEEN AFFIRMED BY THE HONBLE MADAS HIGH COURT IN TA X CASE APPEAL NO.789 OF 2013 DATED 22.7.2014, COPY OF WHIC H IS PLACED ON RECORD. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE DECISIONS RELIED ON. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DISALLOWED COMMISSION PAY MENTS MADE TO FOREIGN AGENTS ON THE GROUND THAT ASSESSEE HAS NOT DEDUCTED TDS. THE ASSESSING OFFICER WAS OF THE VIEW THAT SALES COMMISSION PAID BY THE ASSESSEE SHALL BE DEE MED TO ACCRUE OR ARISE IN INDIA, IF SUCH INCOME IS ACCRUED OR ARISEN FROM ANY BUSINESS CONNECTION IN INDIA, THE ASSESSIN G OFFICER 5 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 WAS OF THE OPINION THAT IN THE INSTANT CASE PAYMENT S WERE MADE FOR ASSESSEES BUSINESS PURPOSES WHICH IS CARR IED ON IN INDIA AND THEREFORE SUCH COMMISSION PAID TO NON- RESIDENTS ABROAD IS DEEMED TO HAVE BEEN ARISEN IN INDIA. THE ASSESSING OFFICER IS NOT DISPUTING THAT THE COMMISSION PAID BY THE ASSESSEE IS NOT FOR EXPORT SALES. FURTHER HE HAS NOT BROUGHT ON RECORD TO SUGGEST THAT NON-RESIDENTS PR OVIDED TECHNICAL SERVICES TO THE ASSESSEE. THE COMMISSIONE R OF INCOME TAX (APPEALS) IN RESPECT OF SALES COMMISSION PAID TO CALZADOS JOSE AND M.G. DIFFUSION INTERNATIONAL DELE TED THE DISALLOWANCE RELYING ON THE DECISION OF THIS TRIBUN AL IN THE CASE OF ITO VS. FAIZAN SHOES PVT. LTD. (SUPRA) WHER E THE FACTS WERE IDENTICAL AS FOREIGN AGENTS HAVE NO PERM ANENT ESTABLISHMENTS IN INDIA, NO PART OF THEIR SERVICES HAVE BEEN RENDERED IN INDIA AND IN SUCH SITUATION THERE IS NO OBLIGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER SECTI ON 195 OF THE ACT. THE DECISION RELIED ON BY THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS BEEN AFFIRMED BY THE HONB LE MADRAS HIGH COURT IN THE CASE OF CIT VS. FAIZAN SHO ES PVT. LTD. IN TAX CASE APPEAL NO.789 OF 2013 DATED 22.07. 2014. 6 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 WHILE AFFIRMING THE SAID DECISION, THE HONBLE HIGH COURT HELD AS UNDER:- 7 . ON A READING OF SECTION 9(1)(VII) OF THE ACT, WE ARE NOT INCLINED TO ACCEPT THE PLEA TAKEN BY THE LEARNED SENIOR STANDING COUNSEL APPEARING FOR THE REVENUE THAT COMMISSION PAID BY THE ASSESSEE TO THE NON-RESIDENT AGENT WOULD COME UNDER THE TERM FEES FOR TECHNICAL SERVICES . IN THE CASE ON HAND, FOR PROCURING ORDERS FOR LEATHER BUSINESS FROM OVERSEAS BUYERS WHOLESALERS OR RETAILERS, AS THE CASE MAY BE, THE NON-RESIDENT AGENT IS PAID 2.5% COMMISSION ON FOB BASIS. THAT APPEARS TO BE A COMMISSION SIMPLICITER . WHAT IS THE NATURE OF TECHNICAL SERVICE THAT THE SO-CALLED NON-RESIDENT AGENT HAS PROVIDED ABROAD TO THE ASSESSEE IS NOT CLEAR FROM THE ORDER OF THE ASSESSING OFFICER . THE OPENING OF LETTERS OF CREDIT FOR THE PURPOSE OF COMPLETING EXPORT OBLIGATION IS AN INCIDENT OF EXPORT AND, THEREFORE, THE NON- RESIDENT AGENT IS UNDER AN OBLIGATION TO RENDER SUC H SERVICES TO THE ASSESSEE, FOR WHICH COMMISSION IS PAID. THE NON-RESIDENT AGENT DOES NOT PROVIDE TECHNICAL SERVICES FOR THE PURPOSES OF RUNNING OF T HE BUSINESS OF THE ASSESSEE IN INDIA. THE SERVICES RENDERED BY THE NON-RESIDENT AGENT CAN AT BEST BE CALLED AS A SERVICE FOR COMPLETION OF THE EXPORT COMMITMENT . WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT THE COMMISSION PAID TO THE NON-RESIDEN T AGENT WILL NOT FALL WITHIN THE DEFINIITION OF FEES FOR TECHNICAL SERVICES . . 8. THE OTHER PLEA RAISED BY MR.T.RAVIKUMAR, LEARNED SENIOR STANDING COUNSEL APPEARING FOR THE APPELLANT REFERRING TO EXPLANATION TO SECTION 9(2) OF THE ACT IS THAT THE INCOME OF THE NON-RESIDENT SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA UNDER CLAUSES (V) OR (V I) OR (VII) OF SECTION 9(1) OF THE ACT AND SHALL BE INCLU DED IN THE TOTAL INCOME OF THE NON- RESIDENT, WHETHER OR N OT 7 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 THE NON-RESIDENT HAS RENDERED SERVICES IN INDIA. 9. THE EXPLANATION TO SECTION 9(2) OF THE ACT WAS SUBSTITUTED BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1 . 6.1976. THE ABOVE SAID EXPLANATION WOULD COME INTO PLAY ONLY I F THE SAID AMOUNT PAID WOULD FALL UNDER THE HEADINGS: (I)INCOM E BY WAY OF INTEREST AS SET OUT IN SECTION 9(1 )(V) O F THE ACT; OR (II)INCOME BY WAY OF ROYALTY AS SET OUT IN SECTION 9(1)(VI) OF THE ACT; OR (III) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES AS SET OUT IN SECTION 9(1)(VII) OF THE ACT . 10. WHILE DEALING WITH SECTION 9(1) OF THE ACT, THE SUPREME COURT IN COMMISSIONER OF INCOME TAX V. TOSHOKU LIMITED, (1980) 125 ITR 525, ON CONSIDERING A TRANSACTION WHERE TOBA CCO WAS EXPORT E D TO JAPAN AND FRANCE AND SOLD THROUGH NON-RESIDENT ASSESSEE S WHO WERE P AI D CO MMI SS ION , H E LD A S UNDER : 0 8. THE S ECOND ASPECT OF THE SAME QUESTION IS WHETHER THE COMMISSION AMOUNT S CREDIT E D IN TH E BOOK S OF THE STATUTORY AGENT CAN BE TREATED A S INCOME S A C C RU E D , A RI S EN , OR D EE M E D TO HA VE ACC RU E D OR ARISEN IN INDIA TO THE NON-RESIDENT ASSE SS EE S DURING THE R E LEVANT YEAR . THIS T A KES US T O S . 9 OF THE ACT. IT I S URGED THAT THE COMMISSION A MOUNT S S HOULD B E TREATED A S INCOME S D EE M E D TO HAVE ACCRUED OR ARISEN IN INDIA AS THEY , ACCORDING TO THE DEPARTMENT , HAD EITHER ACCR UED OR A RISEN THROUGH AND FROM THE BUSINESS CONNECTION IN INDIA THAT E XI S T E D B E TW EE N TH E NON-R E SIDENT ASSESSEES AND THE STATUTORY AGENT . THIS CONTENTION OVERLOOKS THE EFFECT OF CL . (A) OF TH E EXPLANATION TO CL . (I) OF SUB-SO (1) OF S . 9 OF THE ACT WHICH PROVIDES THAT IN THE CA S E OF A BUSINE SS OF WHICH A LL THE OPERATIONS ARE NOT C A RRI E D OUT IN INDIA , THE INCOME OF THE BU S INES S D EE M E D UNDE R THAT C LAU SE TO ACCRU E OR A RISE IN INDI A S H A LL B E 8 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 ONLY S UCH PART O F THE INCOM E AS I S R E A S ONABLY ATTRIBUTABLE TO TH E OPERATIONS C A RRI E D OUT IN INDIA . IF A LL S UCH OPERATION S AR E C A RRI E D O UT IN INDI A, THE ENTIRE INCOM E A C CRUING THER EF ROM S H A LL B E D E EMED TO HAVE ACCRU E D IN IND I A. IF HOWEVE R , A LL THE OPERATION S ARE NOT C A RRI E D OUT IN THE T A X A BLE TERRITORIE S , THE PROFIT S AND GA IN S O F BU S INE SS DE E MED TO A CCRU E IN INDIA THROUGH AND F ROM BU S INE SS C ONNECTION IN INDI A S H A LL B E ONLY S UCH PROFIT S AND G A INS AS ARE REA S ONABLY ATTRIBUT A BL E TO THAT PART OF TH E OP E RATION S CA RRI E D OUT IN TH E TAXABL E TERRITORIE S. IF NO OPERAT I ON S OF BU S INE SS ARE C A RRI E D OUT IN THE T A XABL E T E RRITORIE S, IT FOLLOW S THAT THE INCOME ACCRUING OR A RI S ING ABROAD THROUGH OR FROM ANY BU S INE SS C ONN EC TION IN INDIA CANNOT BE DEEMED TO ACCRUE OR A RI SE IN INDIA ( SEE CIT V. R . D . AGGARW A L AND CO . [1965] 56 ITR 20 (SC) AND CARBORANDUM CO . V . CIT [1977] 108 ITR 335 (SC) WHICH AR E DECID E D ON THE BA S I S OF S. 42 OF THE INDIAN IT . ACT , 1922, WHICH CORRE S PONDS TO S . 9(1)(I) O F TH E ACT ). 9. IN TH E IN S TANT CA SE, THE NON-RE S IDENT A SS E SSE E S DID NOT CARRY ON ANY BU S INE SS OP E RATIONS IN TH E T A X A BL E T E RRITORI ES. THEY AC T E D A S SE LLING AG E NT S OUT S ID E INDIA. TH E R ECE IPT IN INDIA OF TH E SA L E PROC EE D S OF TOBACCO R E MITT E D OR CAU SE D TO BE REMITT E D BY THE PURCHA SE R S F R O M ABRO A D D OES N O T A MOUNT T O A N OPER A TION CA RRIED OUT BY TH E A SSESSEES I N IND IA AS CON T E MP LA T E D B Y CL . (A) OF TH E EXPLANATION TO S. 9 ( 1 )( I ) OF THE ACT. TH E COMMIS S ION AMOUNTS WHICH W E R E E A RN E D BY TH E N ON- RES IDENT A SSESSE E S F OR SERV I CES R E ND E RED O UT S ID E I ND I A CA NNOT , TH E R EFO RE , B E D EEME D TO B E INC O ME S WHICH HAVE EITHER ACCRU E D OR A RISEN IN INDIA . TH E HIGH COURT WA S, THEREFORE , RIGHT I N A N S W ER ING TH E QU ES TION A G A IN S T TH E D E P A RTM E NT . 11. THE FACTS OF THE PRESENT CASE ARE A KIN TO THE FACTS OF THE DECISION IN TOSHOKU L IMITED CASE, REFERR E D SUPRA. IN THE INSTANT CASE A LSO THE ASSESSEE ENGAGED 9 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 THE S ERVICE S OF NON-RESIDENT AGENT TO PROCURE EXPORT ORDERS AND P A ID COMMISSION. THAT APART , THE COMMISSIONER OF INCOME (APPEALS) AS WELL AS THE TRIBUN A L HAVE CORRECTLY APPLI E D THE PRINCIPLE LAID DOWN IN GE INDIA TECHNOLOGY CEN. (P) LTD. CASE, REFERRED SUPRA , TO HOLD THAT THE A S SE S SEE IS NOT LIABLE TO DEDUCT TAX AT S OURCE WHEN THE NON-RESIDENT AGENT PROV I D ES S ERVICE S OUTSIDE INDIA ON PAYMENT OF COMMISSION . 12. IN T HE LIGHT OF THE ABOVE SAID DECISIONS AND THE FINDING RENDERED BY US ON TH E E ARLIER IS SUE THAT THE SERVICE S RENDERED BY THE NON- RE S IDENT AGENT CAN AT B E ST BE C A LL E D A S A SERVICE FOR COMPLETION OF THE EXPORT COMMITMENT AND WOULD NOT FALL WI T HIN T HE DEFINITION OF FEE S FOR T E CHNICAL S ERVICE S , WE ARE THE FIRM VIEW THAT S E CTION 9 OF THE ACT I S NOT APPLICABL E TO THE CASE ON HAND AND CONSEQUENTLY , SECTION 195 OF THE ACT DOES NOT COME INTO PLAY . IN VIEW OF THE A BOVE FINDING , THE D E CI S ION OF THE SUPREME COURT IN TRANSMISSION CORPORATION OF A . P. LTD . CASE, REFERR E D SUPRA , RELIED UPON BY T HE LEARNED STANDING COUNSEL FOR T HE REVENUE IS NOT APPLICABLE TO THE FACT S OF THE PRE S ENT CAS E. WE F IND NO INFIRMITY IN THE ORDER OF THE T R IBUN A L IN CONFIRMING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) . 13 . FOR THE FOREGOING REASONS , THE SUBSTANTIAL QUESTIONS OF LAW RAIS E D FOR OUR CON S IDERATION ARE ANSWERED AGAIN S T THE REVENUE AND WE FIND NO REA S ON TO DIFFER WITH THE CONCURRENT FINDINGS RENDERED BY THE COMMISSIONER OF INCOME TAX (APPE A LS) AND T HE TRIBUN A L. IN TH E R ES ULT , THIS APPE A L I S DI S MI SS ED . NO CO S T S . 10 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 6. THE HONBLE HIGH COURT HELD THAT THE SERVI CES RENDERED BY THE NON-RESIDENT AGENT CAN AT BEST BE CALLED AS A SERVICE FOR COMPLETION OF EXPORT COMMITMENT, THEREFORE COMM ISSION PAID TO NON-RESIDENT AGENTS WILL NOT FALL WITHIN T HE DEFINITION OF FEES FOR TECHNICAL SERVICES. FURTHER IT WAS ALSO HE LD THAT COMMISSION AMOUNTS EARNED BY NON-RESIDENT ASSESSEES FOR SERVICES RENDERED OUTSIDE INDIA CANNOT BE DEEMED TO BE INCOMES WHICH HAVE EITHER ACCRUED OR ARISING IN IND IA. THUS, RESPECTFULLY FOLLOWING THE SAID DECISION WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETIN G THE DISALLOWANCE MADE UNDER SECTION 40(A)(I) OF THE ACT AND REJECT THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 7. THE ASSESSEE FILED CROSS OBJECTION AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN SUSTAI NING THE DISALLOWANCE TO THE EXTENT OF COMMISSION PAID TO CE C FRANCE AND MODERN AMUSEMENT, USA. 8. COUNSEL FOR THE ASSESSEE SUBMITS THAT COMMISSION ER OF INCOME TAX (APPEALS) SUSTAINED THE DISALLOWANCE ON THE GROUND THAT BUYER (OTHER THAN CONSIGNOR) AND THE C ONSIGNEE 11 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 ARE IN DIFFERENT PLACES. THE COUNSEL SUBMITS THAT I N THE CASE OF CEC FRANCE, AGENT IS IN FRANCE AND THE BUYER IS AT HONG KONG AND IN THE CASE OF MODERN AMUSEMENT, USA CONSI GNEE IS IN CANADA. COUNSEL SUBMITS THAT THE REASON THAT THE AGENT AND BUYER ARE AT DIFFERENT COUNTRIES AND THEREFORE , THE AGENTS HAVE RENDERED TECHNICAL SERVICES TO THE ASSESSEE FO R PROCURING ORDERS IS NOT CORRECT. 9. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN SUSTAIN ING DISALLOWANCE. 10. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTH ORITIES. THE ONLY REASON FOR SUSTAINING THE DISALLOWANCE GIV EN BY THE COMMISSIONER OF INCOME TAX (APPEALS) THAT AGENT AN D THE BUYER ARE AT DIFFERENT COUNTRIES AND THEREFORE AG ENTS MIGHT HAVE RENDERED TECHNICAL SERVICES TO THE ASSESSEE I S MISPLACED. SIMPLY BECAUSE THE PARTIES ARE AT DIFFE RENT COUNTRIES ONE CANNOT PRESUME THAT FOREIGN AGENTS H AVE RENDERED TECHNICAL SERVICES TO THE ASSESSEE. THUS, WE DELETE THE DISALLOWANCE SUSTAINED BY THE COMMISSION ER OF 12 ITA NO. 541/MDS/2014 & C.O.NO.37/MDS/2014 INCOME TAX (APPEALS) AND ALLOW THE CROSS OBJECTION OF THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, TH E 26 TH DAY OF SEPTEMBER, 2014 AT CHENNAI. SD/- SD/- . ( ' )* ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDR A PRASAD ) ACCOUNTANT MEMBER / , JUDICIAL MEMBER/ ) , ) /CHENNAI, - /DATED, 26 TH SEPTEMBER, 2014 SOMU /0 10 /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICE R 3. 2 () /CIT(A) 4. 2 /CIT 5. 0 6 /DR 6. /GF .