DCIT, Circle-2 (1)(2), Ahmedabad V. M/s. Jagson Colorchem Ltd., Ahmedabad

ITA 112/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4097 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LALIT P JAIN
• Keywords: Business expenditure; Principle of natural justice; Services rendered outside India; Deemed to accrue or arise in india; Additional evidence; Permanent establishment; Advance ruling; Non-deduction of tax; Corroborative evidences; Assessment record; TDS
• Section: 5(2); 40(a)(ia); 37(1); 195; 37; 154

Judgement Text

, D - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MADHUMITA ROY, JUDICIAL MEMBER . ITA NO.112/AHD/2017 WITH CO NO. 32/AHD/2017 / ASSTT. YEARS: 2013-14 DCIT CIR. 2(1)(2), AHMEDABAD 1 ST FLOOR NAVJIVAN TRUST BUILDING, AHMEDABAD-380 014 VS. M/S. JAGSON COLORCHEM LTD. 5601/1,PHASEII, GIDC,VATVA, AHMEDABAD-382445 PAN- AAACJ7664C APPELLANT/ RESPONDENT RESPONDENT / CROSS OBJECTOR ASSESSEE BY : SHRI LALIT P. JAIN, SR. D.R REVENUE BY : SHRI KARAN SHAH, A.R / DATE OF HEARING : 15/11/2018 / DATE OF PRONOUNCEMENT: 08/02/2019 / O R D E R PER PRADIP KUMAR KEDIA- AM : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AHMEDABAD (CIT(A)IN SHORT) DATED 11/11/2016 RELEVAN T TO THE ASSESSMENT YEAR 2013-14. IN THE REVENUES APPEAL, T HE ASSESSEE HAS ALSO FILED CROSS OBJECTION CAPTIONED ABOVE. 2. AS PER THE GROUNDS OF APPEAL, THE REVENUE HAS CH ALLENGED THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE U NDER SECTION 40(A)(I) OF THE ACT ON ACCOUNT OF EXPORT COMMISSION AMOUNTIN G TO RS. IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 2 1,62,09,377/-FOR NON-DEDUCTION OF TAX DEDUCTED AT S OURCE OR UNDER SECTION 37 OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE, AN INDIAN COMPANY, IS STATED TO BE ENGAGED IN THE MANUFACTURING AND TRADING OF DYES AN D COLOURS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMS T O HAVE RECEIVED SALE ORDERS FROM PARTIES LOCATED ABROAD THROUGH FOREIGN AGENTS. ON RECEIPT OF THE ORDERS SO ARRANGED BY THE FOREIGN AGENTS, THE M ATERIAL WAS SHIPPED AND COMMISSION BECAME PAYABLE TO THE SAID AGENTS. I N THE COURSE OF THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER (AO) NOT ICED THAT THE ASSESSEE HAS DEBITED EXPENSES TOWARD SUCH EXPORT CO MMISSION. THE AO MADE ENQUIRIES IN THIS REGARD AND WAS OF THE VIEW T HAT THE COMMISSION EXPENSES COULD NOT BE SUBSTANTIATED BY THE ASSESSEE . THE AO ACCORDINGLY DISALLOWED THE COMMISSION EXPENSES AMOUNTING TO RS. 2,00,97,986/- CLAIM UNDER SECTION 37(1) OF THE ACT. COUPLED WITH THIS, THE AO ALSO NOTED THAT THE ASSESSEE FAILED TO DEDUCT THE TAX ON COMMISSION PAYMENT TO NON-RESIDENT FOREIGN AGENTS HAVING REGARD TO THE PROVISION OF THE SECTION 195 OF THE ACT. THE AO ACCORDINGLY INVOKED PROVISION OF SECTION 40(A)(I) OF THE ACT AND DISALLOWED THE COMM ISSION EXPENSES ON THE GROUNDS OF NON-DEDUCTION OF TDS AS WELL. AS A RESULT, THE ASSESSEE INCOME WAS INCREASED BY AO TO THIS EXTENT. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) TOOK NOTE OF THE DETAILED WRITTEN SUBMISSION MADE ON BEHALF OF THE ASSESSEE AND ALSO THE REMAND REPORT CALLED FROM FROM THE AO IN THIS REGARD. THE CIT(A) ALSO TOOK INTO ACCOUNT SEVERAL EVIDENCES FILED BY WAY OF ADDITIONAL EVIDENCES AFTER CONFRONTING THE S AME TO THE AO. AFTER TAKING NOTE OF VARIOUS DOCUMENTARY EVIDENCES AND PO SITION OF LAW PREVAILING IN THIS REGARD, THE CIT(A) FOUND LACK OF JUSTIFICATION IN THE ACTION OF THE AO AND HELD THAT THE COMMISSION EXPEN SES SO CLAIMED BY ASSESSEE COULD NOT BE DISALLOWED. THE CIT(A) ACCOR DINGLY REVERSED THE IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 3 ACTION OF THE AO BY WAY OF DECISION MAKING PROCESS AS REPRODUCED BELOW; 3.5. DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE OF FOREIGN COMMISSION PAYMENTS AMOUNTI NG TO RS.2,00,97,896/- FOR THE REASON THAT THE APPELLANT HAS FAILED TO FURNISH THE COMPLETE DETAILS ABOUT THE IDENTITY OF THE PERS ONS TO WHOM FOREIGN COMMISSION PAYMENTS WERE MADE, THE COPY OF AGREEMEN T WITH THE FOREIGN AGENTS AND ALSO FAILED TO PROVE NATURE OF S ERVICES RENDERED TO THE APPELLANT. THE APPELLANT EVEN DID NOT MAKE THE TDS ON THE AFORESAID PAYMENTS, AND THEREFORE, THE AO ALSO INVO KED THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT, FOR NON-DEDUC TION OF TDS U/S. 195 OF THE I.T. ACT,1961. IN ABSENCE OF ANY PROOF, EVID ENCES, JUSTIFICATION THE COMMISSION PAYMENT, THE ENTIRE EXPENDITURE DEBI TED BY THE ASSESSEE WAS NOT FOUND JUSTIFIED AND THE SAME WAS DISALLOWED . 3.6 IT HAS BEEN NOTICED THAT IN THE ASSESSMENT PROC EEDINGS, THE APPELLANT ONLY SUBMITTED THAT THE APPELLANT WAS NOT UNDER ANY LIABILITY OF TDS BECAUSE NONE OF THE SERVICES WERE RENDERED I N INDIA. IT WAS ALSO CLAIMED THAT THE PAYMENT TO THE COMMISSION AGENTS W ERE MADE IN THEIR ACCOUNT MAINTAINED OUTSIDE INDIA IN FOREIGN CURREN CY. THE COMMISSION PAYMENTS WERE WELL WITHIN THE LIMITS PRESCRIBED BY RBI AND ALL SUCH REMITTANCES WERE MADE THROUGH PERMITTED BANKING CHA NNELS. THE APPELLANT HAS SUBMITTED THE COMPLETE SET OF EMAILS PROVIDED ALONG WITH INVOICE COPIES AND BANK PAYMENT ADVISORIES IN ORDER TO PROVE THE GENUINENESS OF THE TRANSACTION AND ALSO THE BANK PA YMENT DETAILS AS A PROOF OF SALES RECORDED BY THE APPELLANT. IT HAS AL SO SUBMITTED THE LIST OF COMMISSION EXPENSES RECORDED ALONG WITH CALCULAT ION OF OUTSTANDING AT THE CLOSING EXCHANGE RATE ALONG WITH LOCAL COMMI SSION PAYMENT. ALL THE AFORESAID DETAILS HAVE BEEN SUBMITTED TO THE AO IN THE ASSESSMENT PROCEEDINGS WHICH WERE NOT FOUND ACCEPTABLE BY THE AO. 3.7. AS DISCUSSED IN THE PRECEDING PARAS, IN THE PR ESENT APPELLATE PROCEEDINGS, THE APPELLANT SUBMITTED THE ADDITIONAL EVIDENCES IN THE FORM OF VARIOUS DETAILS AND EVIDENCES WHICH ARE NOT ED AS UNDER:- A) THE LEDGER ACCOUNT OF COMMISSION EXPENSES B) APPLICATION THE BANK FOR REMITTING THE COMMISSIO N TO THE COMMISSION AGENT ALONGWITH THE DEBIT NOTE OF THE AG ENT AND THE FORM NO. 15CB C) BANK ADVICE OF THE REMITTANCE OF COMMISSION TO T HE COMMISSION AGENT D) THE LEDGER ACCOUNT OF COMMISSION EXPENSES PAYAB LE WHICH HAVE BEEN PAID IN THE SUBSEQUENT YEAR IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 4 E) APPLICATION THE BANK FOR REMITTING THE COMMISSIO N TO THE COMMISSION AGENT ALONGWITH THE DEBIT NOTE OF THE AG ENT AND THE FORM NO. 15CB F) BANK ADVICE OF THE REMITTANCE OF COMMISSION TO THE COMMISSION AGENT G) COMMISSION AGREEMENT WITH THE VARIOUS COMMISSIO N AGENTS FOR THE F.Y. 2012-13 H) NO PE DECLARATION OF THE VARIOUS COMMISSION AGE NTS 3.8. THE AO HAS OBJECTED TO THE ADMISSION OF THE A DDITIONAL EVIDENCES THE SUPPORT OF JUDGMENT OF HON'BLE GUJARAT HIGH C OURT IN THE CASE OF FAIRDEAL FILAMENTS PVT. LTD. VS. CIT (SUPRA). HOWEV ER, IT HAS BEEN NOTICED THAT THE JUDGMENT RELIED UPON BY THE AO IS ON DIFFERENT FACTS AND PERTAINS TO THE PERIOD BEFORE AMENDMENT IN SECT ION 251 W.E.F. 01/06/2003 UNDER WHICH CIT(A) HAS NO POWERS TO SET ASIDE AS HE HAD PRIOR TO 01/06/2003. NOWHERE IT HAS BEEN ALLEGED B Y THE AO THAT THE APPELLANT WAS NEGLIGENT, NON-COOPERATIVE AND RECALC ITRANT DURING THE ASSESSMENT PROCEEDINGS IN SUBMISSION OF THE ADDITIO NAL EVIDENCES NOTED ABOVE. 3.9. THE APPELLANT HAS SUBMITTED THE AFORESAID ADD ITIONAL EVIDENCES IN SUPPORT OF THE VARIOUS DETAILS AND EVIDENCES SUBMIT TED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THESE ADDITIONAL EVIDENCES SUBMITTED WERE GOING INTO THE ROOTS OF THE ISSUE UN DER CONSIDERATION AND THEREFORE, AS A PRINCIPLE OF NATURAL JUSTICE AN D EQUITY AND TO IMPART THE JUSTICE, THE ADDITIONAL EVIDENCES SUBMITTED ARE ADMITTED RESPECTFULLY FOLLOWING THE JUDGMENTS OF HON'BLE COURTS BRIEFLY D ISCUSSED BELOW AND SAME ARE CONSIDERED WHILE DECIDING THE ISSUE IN TH E SUBSEQUENT PARAS. - ANMOL COLOUR INDIA PVT. LTD. VS. ITO 31 SOT 18 (J P) 121TTJ 269 WHEREBY IT HAS BEEN HELD THAT THE POWERS OF THE FI RST APPELLATE AUTHORITY ARE VERY WIDE AND COTERMINOUS WITH THOS E OF THE ASSESSING OFFICER AND WHAT AO CAN DO HE CAN DO AND WHAT AO FA CE TO DO THAT ALSO HE CAN DO. - CIT VS. KHANPUR COOL SYNTHICATE (1964) 53 ITR 2 25 (SC) WHEREBY IT HAS BEEN HELD THAT SECTION 250(4) EMPOW ERS THE CIT(A) TO MAKE FURTHER INQUIRIES ON ITS OWN OR TO DIRECT THE A.O. TO MAKE FURTHER INQUIRY AND TO REPORT HIM. - CIT VS. K. RAVINDRANATHAN NAIR (2003) 131 TAXMAN 743 (KER.) WHEREBY IT HAS BEEN HELD THAT THE CIT(A) WAS NOT JU STIFIED IN REJECTING THE ADMISSION OF CONFIRMATORY LETTERS STRAIGHT WAY ON THE PLEA THAT THE EVIDENCES WAS NOT FILED BEFORE THE A.O. THIS RA TIO SQUARELY APPLIES ON THE FACTS ON THE PRESENT CASE IN AS MUCH AS HERE ALSO A.O.'S ALLEGATION WAS THAT THE EVIDENCES WERE NOT FILED B EFORE HIM WHICH IS NOT JUSTIFIED GROUND FOR REJECTION. - SMT. PRABHAVATI SHAH VS. CIT (1998) 231 ITR 1 (BO M.) IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 5 - CIT VS. SURETECH HOSPITAL & RESEARCH CENTRE LTD. (2007) 293 ITR 53 WHEREBY IT HAS BEEN HELD THAT THE FINDING RECORDED BY THE TRIBUNAL THAT DOCUMENTS PRODUCED BY THE APPELLANT B EFORE THE CIT(A) WERE NECESSARY FOR DISPOSAL OF THE APPEAL ON MERITS IT WAS JUSTIFIED IN HOLDING THAT THE CIT(A) OUGHT TO HAVE EXERCISED ITS POWER TO ADMIT ADDITIONAL EVIDENCES. IN THE INSTANT CASE THE CERTI FICATE OF THE IRCTC AND THE CERTIFICATE OF THE CHARTERED ACCOUNTANT OF THE IRCTC IN FORM NO.26A IN RESPECT TO RULE 31ACB WAS NECESSARY TO B E CONSIDERED FOR DISPOSAL OF THE APPEAL ON MERITS. - ACIT VS. JOGINDERSINGH ITA NO. 2942/DELHI/2011 (H ON'BLE DELHI ITAT) - ASHOKKUMAR B. PATEL IN ITA NO. 1804/AHD/2009 (HON 'BLE ITAT, AHMEDABAD) HAS HELD THAT THE PURPOSE OF RULE-46A IS TO ENSURE THAT THERE IS NO MISCARRIAGE OF JUSTICE AND THOUGH EXCEP TION PROVIDED IN RULE-46A DID NOT EXIST THE EVIDENCES SHOULD BE ADMI TTED AFTER AFFORDING OPPORTUNITY TO THE A.O. - KESHAV MILLS CO. LTD. VS. CIT (1965) 56 ITR 365 - HON'BLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KAMLABEN SURESHCHANDRA BHATI (2014) 44 TAXMANN.COM 459 - HAVE HELD THAT THE ADMISSION OF ADDITIONAL EVIDENCES COULD NOT BE STATED TO BE IN BREACH OF RE QUIREMENT OF RULE 46A, PARTICULARLY WHEN INTEREST OF REVENUE WAS SAFE GUARDED BY CALLING FOR REMAND REPORT AND PERMITTING AO TO COMMENT ON S UCH ADDITIONAL EVIDENCES. 3.10. FURTHER, ON GOING THROUGH THE FACTS OF THE CA SE, IT IS SEEN THAT THE IDENTICAL ISSUE ON SIMILAR FACTS IN APPELLANT'S OWN CASE HAS BEEN DECIDED BY MY PREDECESSOR CIT(A)-2, AHMEDABAD FOR A. Y. 2010-11 VIDE ITS APPELLATE ORDER NO. CIT(A)-2/DCIT(OSD)-I,C IR.4/27/13-14 DATED 30/03/2015 IN FAVOUR OF THE APPELLANT. FOR RE ADY REFERENCE, THE RELEVANT EXTRACT OF THE DECISION IS REPRODUCED HERE UNDER:- ' 3.3. DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS DISALLOWED THE COMMISSION PAID TO FOREIG N AGENTS BY HOLDING THAT THE INCOME ARISING ON ACCOUNT OF COMMI SSION PAYABLE TO OVERSEAS AGENTS WAS DEEMED TO ACCRUE OR ARISE IN INDIA AND WAS ACCORDINGLY TAXABLE UNDER THE PROVISI ONS OF SECTION 5 (2)(B) READ WITH SECTION 9 (1)(I) OF INCO ME TAX ACT. IT HAS FURTHER BEEN OBSERVED BY THE AO THAT THE APPELL ANT COMPANY HAD FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 195(2) OF THE ACT. HE HAS ALSO HELD, WITHOUT PREJUDICE TO THE MAI N FINDINGS THAT THE APPELLANT HAD ALSO FAILED TO PROVE THAT THE COM MISSIONS PAID TO THE AGENTS WERE GENUINE AND JUSTIFIED. IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 6 THE APPELLANT ON THE OTHER HAND, IN ITS DETAILED WR ITTEN SUBMISSION, HAS CLAIMED THAT THE PROVISIONS OF SECT ION 5(2) (B) READ WITH SECTION 9(1)(I) OF INCOME TAX ACT WERE NO T APPLICABLE IN ITS CASE. THE INCOME HAS BEEN EARNED ABROAD AND IS, THEREFORE, NOT TAXABLE IN INDIA. IT HAS ALSO GIVEN DETAILED EV IDENCES TO PROVE THAT THE COMMISSION PAID WAS GENUINE. THE ISSUES WHICH ARE TO BE EXAMINED AND DECIDED ARE : - 1. WHETHER THE COMMISSION PAID TO FOREIGN AGENTS IS TAXABLE IN INDIA BY VIRTUE OF THE PROVISIONS OF SECTIONS (2)(B ) READ WITH SECTION 9 (1)(I) OF INCOME TAX ACT. 2. WHETHER THE PROVISIONS OF SECTION 195(2) WERE AP PLICABLE ON THE APPELLANT AND IT SHOULD HAVE DEDUCTED TAX AND I N CASE OF NO DEDUCTION HE SHOULD HAVE OBTAINED A NO DEDUCTION CE RTIFICATE FROM THE AO. 3. WHETHER THE COMMISSION PAID WAS GENUINE AND THE SERVICES HAVE BEEN RENDERED. 2.3.1 REGARDING THE FIRST ISSUE, IT IS NOTED FROM THE EVIDENCES GIVEN BY THE APPELLANT AS WELL AS NOTED BY THE AO I N HIS ORDER THAT THE SERVICES HAVE BEEN RENDERED BY THE FOREIG N AGENTS OUTSIDE INDIA. THE SALES WERE BOOKED BY THEM IN THE IR COUNTRY OR FOR THE COUNTRY FOR WHICH THEY HAVE BEEN APPOINTED AS COMMISSION AGENTS. NONE OF THE ACTIVITY OF SOLICITI NG THE CLIENTS AND PROCURING THE ORDERS IS IN INDIA. THE GOODS ARE BEING DELIVERED BY THE APPELLANT COMPANY IN THE OTHER COU NTRY. THE ACTIVITIES OF PROCURING THE PAYMENT ON BEHALF OF TH E APPELLANT COMPANY ARE ALSO DONE ABROAD. THE AO WAS, THEREFORE , NOT RIGHT IN HOLDING THAT THE SOURCE OF INCOME LIES IN INDIA AS THE SALES HAVE BEEN MADE FROM INDIA. THE PROVISIONS OF INCOME TAX ACT CLEARLY PROVIDE THAT THE TAX WOULD BE DEDUCTED ON T HE INCOME WHICH IS TAXABLE IN INDIA. THE ACTIVITY OF EARNING THE INCOME IS NOT THE SALE BUT SOLICITING THE SALES BY COMMISSION AGENTS. THOUGH THIS ACTIVITY IS LINKED TO THE SALES OF THE COMPANY, BUT IT CANNOT BE SAID THAT THE INCOME HAS BEEN DERIVED FRO M SALES WHICH HAS BEEN MADE FROM INDIA. THE INCOME HAS BEEN DERIV ED FROM THE ACTIVITY OF SOLICITING THE SALES ON BEHALF OF THE A PPELLANT COMPANY. THE AGENTS HAVE CARRIED OUT ALL THE ACTIVI TY ON THE FOREIGN SOIL AND NONE OF THEIR ACTIVITY IS IN INDIA . THEREFORE, IT CANNOT BE SAID THAT THE INCOME HAS ACCRUED OR ARISE N IN INDIA AND THE SOURCE OF INCOME WAS IN INDIA. THERE IS NO FACT BROUGHT OUT BY THE AO IN THE ORDER AS WELL AS OBSERVED BY M E DURING THE COURSE OF APPELLATE PROCEEDINGS TO INDICATE THAT TH E SERVICES HAVE BEEN RENDERED IN INDIA. THE APPELLANT HAS RIGHTLY RELIED ON THE JUDGMENT OF HONOURABLE SUPREME COURT IN THE CASE OF TOSHOKU (SUPRA) WHEREI N IT HAS BEEN HELD THAT COMMISSION EARNED BY THE NON-RESIDEN T FOR ACTING IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 7 AS THE SELLING AGENT FOR THE INDIAN EXPORTER, WHERE IN SUCH NON- RESIDENT WAS RENDERING SERVICES FROM OUTSIDE INDIA DOES NOT ACCRUE IN INDIA. IN THE PRESENT CASE BEFORE ME ALSO , THE FOREIGN SELLING COMMISSION AGENT IS RESIDENT OF FOREIGN COU NTRY, FROM WHERE THE PROCUREMENT SERVICE HAS BEEN PROVIDED FOR WHICH THE COMMISSION HAS BEEN PAID, AND, THEREFORE, THE ISSUE IS DIRECTLY AND SQUARELY COVERED BY THE APEX COURT DECISION. REGARDING THE OBSERVATION OF THE AO THAT THE INCOME IS DEEMED TO ACCRUE OR ARISE IN INDIA BY APPLYING THE PROVISIONS OF SECTION 9 (1)(I), IT IS SEEN THAT THERE IS NO FACT ON RECORD TO INDICATE THAT ANY OF THE AGENTS HAD ANY PERMANENT ESTABLISHMEN T IN INDIA. ALL THE AGENTS HAD THEIR OFFICES ON THE FOREIGN SOI L AND THE CORRESPONDENCE WHICH HAS BEEN PLACED BEFORE ME DO N OT INDICATE THAT THEY HAD ANY PE IN INDIA. FURTHER, THE ASSESSI NG OFFICER HAS ALSO NOT POINTED OUT ANY SUCH FACT IN ITS ORDER WHI CH INDICATE THAT THERE WAS ANY SUCH OFFICE WHICH ATTRACTS THE DEEMIN G PROVISIONS. FURTHER, THE OBSERVATION THAT THE SOURCE OF INCOME WAS IN INDIA, IS ALSO NOT PROPER AS IT HAS CLEARLY BEEN DISCUSSED IN THE PRECEDING PARAGRAPHS THAT NONE OF THE SERVICES HAVE BEEN RENDERED IN INDIA AND SOURCE OF INCOME CANNOT BE SA ID TO BE IN INDIA AS THE SOURCE OF INCOME IS THE SERVICES RENDE RED AND NOT THE SALES. THERE IS NO BUSINESS CONNECTION IN INDIA FRO M WHICH THE INCOME HAS BEEN EARNED, THERE IS NO PROPERTY THROUG H OR FROM WHICH THE INCOME HAS BEEN EARNED. THEREFORE, THE PR OVISIONS OF SECTION 9(1)(I) ALSO CANNOT BE APPLIED. THE APPELLA NT HAS RIGHTLY PLACED RELIANCE ON THE JUDGMENT OF HONOURABLE SUPRE ME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PRIVATE LIM ITED 327 ITR 456. IN A RECENT JUDGMENT OF HONOURABLE ITAT CH ENNAI BENCH IN THE CASE OF I M GEARS PRIVATE LIMITED, 49 TAXMAN N.COM 175, IT HAS BEEN HELD THAT NO TAX WAS DEDUCTIBLE AT SOURCE ON COMMISSION PAYMENT TO OVERSEAS AGENT FOR PROCURING ORDERS, AS SAID SERVICES NOT BEING IN NATURE OF TECHNICAL SERVICES, PAYMENTS IN QUESTION WERE NOT TAXABLE IN INDIA. IN THE PRESENT CASE ALSO THE SERVICES RENDERED BY THE AGENTS OF THE APPELLANT TO WHOM THE COMMISSION PAYMENT HAS BEEN MADE, ARE IN THE NATURE OF SOLICIT ING ORDERS FOR THE APPELLANT AND NO OTHER SERVICES, WHICH CAN BE C ATEGORIZED AS TECHNICAL SERVICES, HAVE BEEN OFFERED. THE RELIANCE IS ALSO PLACED ON THE JUDGMENT OF HONOURABLE GUJARAT HIGH COURT IN THE CASE OF VINAYAK EXPORTS [TAX APPEAL NO.404 OF 2011 DT. 12.0 6.12] AND THE JUDGMENT OF BANGALORE BENCH OF ITAT IN THE CASE OF EXOTIC FRUITS P. LTD. VS. ITO (INTL)[40 TAXMAN.COM 348]. RECENTLY THE HONOURABLE HIGH COURT OF RAJASTHAN HAS ALSO EXPRESSED SIMILAR OPINION IN THE CASE OF MODERN INS ULATORS LTD [2015] 55 TAXMANN.COM 260 (RAJASTHAN). THEREFORE, IN VIEW OF THE PRECEDING DISCUSSION, THE AO WAS NOT JUSTIFIED TO HOLD THAT THE COMMISSION PAYABLE TO TH E OVERSEAS AGENTS WAS DEEMED TO ACCRUE OR ARISE IN INDIA AND I S TAXABLE IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 8 UNDER THE ACT IN VIEW OF THE SPECIFIC PROVISIONS OF SECTIONS 5 (2)(B) READ WITH SECTION 9 (1) (I) OF INCOME TAX AC T. 2.3.2 REGARDING THE ISSUE OF OBTAINING NO DEDUCTION CERTIFICATE UNDER SECTION 195, IT IS SEEN THAT FOR THE APPLICAB ILITY OF THE PROVISIONS OF THIS SECTION, THE SUM MUST BE CHARGEA BLE UNDER THE PROVISIONS OF THE INCOME TAX ACT. SECTION 195 PROVI DES FOR DEDUCTION OF TAX BY THE PERSON RESPONSIBLE FOR PAYI NG TO A NON- RESIDENT ANY INTEREST OR ANY OTHER SUM CHARGEABLE U NDER THE PROVISIONS OF THE ACT. IT IS CLEAR THAT THE PAYMENT WAS NOT THE INTEREST. IT HAS TO BE SEEN WHETHER THE PAYMENT IS COVERED UNDER THE TERM 'ANY OTHER SUM CHARGEABLE UNDER THE PROVIS ION OF THIS ACT'. IT HAS BEEN OBSERVED IN THE PRECEDING DISCUSS ION THAT INCOME WAS NOT CHARGEABLE TO TAX AS IT HAS NOT BEEN RECEIVED IN INDIA NOR IT HAS ACCRUED OR ARISEN IN INDIA DIRECTL Y OR INDIRECTLY. THEREFORE, ONCE THE INCOME IS NOT TAXABLE THERE IS NO LIABILITY TO DEDUCT TAX AND, THEREFORE, IT WAS NOT OBLIGATORY FO R THE APPELLANT TO DEDUCT TAX. IN VIEW OF THIS, THERE WAS NO VIOLAT ION OF THE PROVISIONS OF SECTION 195 AND THE APPELLANT ALSO WA S NOT REQUIRED TO PAY NO DEDUCTION CERTIFICATE FROM THE AO. THE ISSUE WHETHER THE PAYER HAS TO APPLY FOR A CERT IFICATE UNDER SECTION 195, IF SOME PAYMENT HAS BEEN MADE, HAS BEE N CONSIDERED BY VARIOUS COURTS. THE SPECIAL BENCH OF CHENNAI ITA T IN THE CASE OF PRASAD PRODUCTIONS REPORTED IN 125 ITD 263 HAS H ELD IN PARA- 35 OF THE ORDER THAT IF THE ASSESSEE HAS NOT APPLIE D TO THE ASSESSING OFFICER UNDER SECTION 195(2) FOR DEDUCTIO N OF TAX AT A LOWER OR NIL RATE OF TAX UNDER A BONA FIDE BELIEF T HAT NO PART OF THE PAYMENT MADE TO THE NON-RESIDENT IS CHARGEABLE TO TAX, THEN HE IS NOT UNDER ANY STATUTORY OBLIGATION TO DEDUCT TAX AT SOURCE ON ANY PART THEREOF. WHILE DECIDING THE CASE, THE H ONOURABLE BENCH HAS CONSIDERED SEVERAL CASES WHICH WERE RELEV ANT TO THE ISSUE. IN THE PRESENT CASE THE APPELLANT DID NOT DE DUCT THE TAX OR APPROACHED THE AO FOR LOW/NO DEDUCTION OF TAX CERTI FICATE AS THERE ARE SEVERAL JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE APPELLANT WHICH HAVE BEEN RELIED BY IT IN THE WRITT EN SUBMISSION. IT HAS BEEN SUBMITTED THAT THE COMMISSION PAID TO N ON-RESIDENT AGENT WAS NOT LIABLE TO TAX UNDER THE PROVISIONS OF THE ACT WHEN THE SERVICES WERE RENDERED OUTSIDE INDIA, SERVICES WERE USED OUTSIDE INDIA, PAYMENTS WERE MADE OUTSIDE INDIA AND THERE WAS NO PERMANENT ESTABLISHMENT OR BUSINESS CONNECTION I N INDIA. THE SUBMISSION GIVEN BY THE APPELLANT CLEARLY DEMONSTRA TES ITS BONA FIDE BELIEF. THEREFORE, CONSIDERING THE ABOVE DISCUSSION, THERE WAS NO LIABILITY ON THE PART OF THE APPELLANT TO DEDUCT TA X UNDER SECTION 195 OF THE ACT OR APPROACH THE I.T. AUTHORITIES FOR NO DEDUCTION TAX CERTIFICATE. IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 9 2.3.3 THE LAST ISSUE WHICH IS TO BE ADJUDICATED IS THAT WHETHER THE COMMISSION PAYMENT WAS GENUINE AND THE SERVICES WER E RENDERED. THE AO HAS BRIEFLY DEALT WITH THE ISSUE IN PARA- 5 OF HIS ORDER. THE APPELLANT, DURING THE COURSE OF APPELLATE PROCE EDINGS, HAS SUBMITTED EVIDENCES WHICH COULD NOT BE PRODUCED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE EVIDENCES WER E IN THE NATURE OF VARIOUS EMAIL CORRESPONDENCES WHICH WERE UNDERTAKEN BY THE APPELLANT WITH VARIOUS COMMISSION AGENTS REG ARDING THE PAYMENTS AND ALSO THE BILLS IN RESPECT OF WHICH COM MISSION HAS BEEN PAID. IT HAS ALSO SUBMITTED VARIOUS DEBIT NOTE S ISSUED BY DIFFERENT AGENTS TO WHOM THE COMMISSION HAVE BEEN P AID. VARIOUS EVIDENCES SUBMITTED BY THE APPELLANT WERE FORWARDED TO THE AO FOR ITS COMMENTS AN OBSERVATION. THE REPORTS GIVEN BY THE AO VIDE ITS LETTER DATED 21/10/2014 AND 17/02/2015 HAV E BEEN REPRODUCED IN THE PRECEDING PAGES OF THIS ORDER. AS DISCUSSED EARLIER, THE EVIDENCE SUBMITTED BY THE APPELLANT HA S BEEN ADMITTED AS SUFFICIENT OPPORTUNITY WAS NOT GIVEN DU RING THE COURSE OF ASSESSMENT PROCEEDINGS TO PRODUCE THE EVI DENCES IN RESPECT OF THE RENDERING OF SERVICES. THE AO HAS CO MMENTED IN ITS REMAND REPORT ON THE DETAILS GIVEN BY THE APPELLANT . SHE HAS NOT POINTED OUT ANY PRIMA FACIE DISCREPANCY IN THE EVID ENCES. IT HAS BEEN REPORTED BY HER THAT THE APPELLANT HAS SUBMITT ED E-MAILS AND UNSIGNED INVOICES RAISED ON THE FOREIGN PARTIES TO WHOM THE SALES HAVE BEEN EXECUTED BUT HAS NOT FURNISHED ANY DOCUMENTS SUCH AS BANK STATEMENTS, COMMISSION AGREEMENTS AND THE RATE OF COMMISSION FIXED ON THE FOREIGN SALES, WHICH CAN PR OVE THAT THE APPELLANT HAD PAID COMMISSION ON FOREIGN SALES. THE AO HAS FURTHER SUBMITTED THAT THE UNSIGNED INVOICES FURNIS HED BY THE APPELLANT FOR MAKING THE SALE DOES NOT HAVE ANY AUT HENTICITY IN ABSENCE OF THE SIGNATURE BY THE AUTHORISED PERSONS OR SEAL OF THE COMPANY. THE OBJECTION RAISED BY THE AO HAS BEEN CO NSIDERED. IT IS NOTED THAT THE SALES MADE BY THE APPELLANT WERE FULLY ACCOUNTED AND IT HAS ONLY PRODUCED COPIES OF THOSE INVOICES THROUGH WHICH THE SALES HAVE BEEN MADE. SINCE THESE ARE ONLY COPIES OF THE INVOICES THERE WAS NO REQUIREMENT OF ANY SIGNATURE. THE AO COULD HAVE CALLED FOR THE BOOKS OF ACCOUNT A ND VERIFIED THE AUTHENTICITY OF THE INVOICES PRODUCED BY THE AP PELLANT BEFORE HIM DURING THE REMAND PROCEEDINGS. IT IS ALSO NOTED THAT THE COMMISSION HAS BEEN PAID THROUGH BANKING CHANNEL AN D THE INVOICES FOR COMMISSION REMITTANCES CLEARLY MENTION S THE SALE INVOICE NUMBER AGAINST WHICH THE COMMISSION IS BEIN G PAID. FURTHER, THE E-MAILS RECEIVED FROM THE COMMISSION A GENTS ARE SUPPORTING EVIDENCES WHICH SHOW THAT THE COMMISSION HAS BEEN PAID ON THE INVOICES WHICH ARE MENTIONED IN THE E-M AILS. ALL THE EVIDENCES PRODUCED ARE GETTING CORROBORATED WITH EA CH OTHER. IN VIEW OF THESE EVIDENCES, I AM OF THE CONSIDERED OPI NION THAT THE APPELLANT HAS ALSO FURNISHED SUFFICIENT EVIDENCE TO PROVE THAT THE SERVICES HAVE ALSO BEEN RENDERED BY THE AGENTS TO W HOM COMMISSION PAYMENT HAS BEEN MADE. IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 10 THE AO HAS ALSO PLACED RELIANCE ON THE DECISION OF HON'BLE AUTHORITY OF ADVANCE RULINGS IN THE CASE OF SKF BOI LERS AND DRIERS (P.) LTD. (2012)18 TAXMANN 325 AND RAJIVE MA LHOTRA (2006) 284 ITR 564 (DELHI). THE JUDGMENTS ARE NOT A PPLICABLE TO THE PRESENT FACTS AS THERE ARE SEVERAL OTHER DECISI ONS WHICH HOLD THAT SUCH KIND OF COMMISSION IS NOT TAXABLE IN INDI A AND ACCORDINGLY NO LIABILITY TO DEDUCT TAX WAS THERE. F URTHER, THE DECISION OF HONOURABLE SUPREME COURT OF INDIA IN TH E CASE OF CIT VS. TOSHOKU LIMITED 125 ITR 525, STILL PREVAILS AS ON DATE AND IS THE LAW OF THE LAND AS REGARDS APPLICABILITY OF IDS PROVISIONS TO COMMISSION PAID TO OVERSEAS/NONRESIDENT AGENTS BY I NDIAN EXPORTERS. IN VIEW OF THE PRECEDING DISCUSSION, IT IS CLEAR TH AT THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX ON THE COMMISSION PAID FOREIGN AGENTS. THEREFORE, THE DISALLOWANCE OF RS. 28,24,28 1/- UNDER SECTION 40(A)(IA) MADE BY THE AO IS DIRECTED TO BE DELETED . THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED .' 3.11. SINCE THE APPELLANT HAS SUBMITTED THE COMPLE TE DETAILS ABOUT THE NATURE OF SERVICES RENDERED, GENUINENESS OF THE CLA IM AND THE COPIES OF THE INVOICES OF THE COMMISSION AGENTS ESTABLISHING THE IDENTITY OF THE COMMISSION AGENTS, BANK ADVICE / REMITTANCE OF COMM ISSION TO THE AGENTS, COMMISSION AGREEMENTS WITH THE AGENTS AND A LSO DECLARATION FROM THE AGENTS ABOUT THEIR NON EXISTENCE OF PE IN INDIA, AMPLY ESTABLISHES THE GENUINENESS OF THE CLAIM OF COMMISS ION TO THE AGENTS. THE AO HAS NOT GIVEN ANY ADVERSE COMMENTS UPON THE MERITS OVER THE ISSUE ON THE ADDITIONAL EVIDENCES AVAILABLE BEFORE HIM IN THE REMAND PROCEEDINGS. IN ABSENCE OF THE SAME, THE ADDITIONAL EVIDENCES AND THE DETAILS AND EVIDENCES SUBMITTED DURING THE ASSESSME NT PROCEEDINGS REMAINED UNREBUTTED. THUS, THE AO'S OBJECTION IN TH IS REGARD IS FOUND NOT CORRECT. MOREOVER, THE PROVISIONS OF SECTION 40 (A)(IA) ARE ALSO NOT APPLICABLE FOR THE REASON THAT THE AO HAS NOT ESTAB LISHED THAT THE SERVICES BY THE AGENTS HAVE BEEN RENDERED IN INDIA OR THE AGENTS HAVE THE BUSINESS CONNECTION OR PERMANENT ESTABLISHMENT IN INDIA. MORE PARTICULARLY, WHEN THE CERTIFICATE BY THE AGENTS AB OUT THEIR NON EXISTENCE OF THE PE IN INDIA AND AGREEMENT WITH COM MISSION AGENTS FOR PROVIDING THE SERVICES OUTSIDE INDIA HAVE BEEN SUBM ITTED BY THE APPELLANT WHICH HAVE NOT BEEN REBUTTED AT ALL. IN V IEW OF THE ABOVE, THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE AS NO LIABILITY TO DEDUCT THE TDS U/S. 195 HAS ARISEN IN THE HANDS OF THE APPELLANT. THE DETAILED DISCUSSION IN THIS REGARD HAS BEEN MADE IN CIT[A)'S APPELLATE ORDER FOR A. Y. 2010-11 IN APPELLANT'S OWN CASE WHI CH HAS BEEN REPRODUCED IN THE PRECEDING PARAS OF THIS ORDER AND FOLLOWING THE SAME, THE DISALLOWANCE OF COMMISSION PAYMENT IS FOU ND NOT CORRECT. THEREFORE, IN VIEW OF THE PRECEDING DISCUSSION THE AO WAS NOT JUSTIFIED TO HOLD THAT THE COMMISSION PAYABLE TO TH E OVERSEAS AGENTS WAS DEEMED TO ACCRUE OR ARISE IN INDIA AND IS TAXAB LE UNDER THE ACT IN IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 11 VIEW OF THE SPECIFIC PROVISIONS OF SECTIONS 5 (2)(B ) READ WITH SECTION 9 (1)(I) OF INCOME TAX ACT AND HENCE, THE SAME IS DELETED . 3.12. RELIANCE IS PLACED ON THE JUDGMENT OF HONOURA BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PRIVATE LIMITED 327 ITR 456 AND THE JUDGMENT OF HONOURABLE ITAT MUMBAI IN THE CASE OF OUR ARDESI B CURSETJEE & SONS LTD. 115 TTJ 916 . 3.12.1. RECENTLY THE HON'BIE MADRAS HIGH COURT IN THE CASE OF CIT, CHENNAI VS. FARIDA LEATHER COMPANY IN TAX APPEAL NO . 484 OF 2015 DATED 20/01/2016 HAS HELD THAT THE COMMISSION PAYMENT BY THE ASSESS EE TO NON - RESIDENT AGENTS FOR SERVICES RENDERED BY T HEM OUTSIDE INDIA IN PROCURING EXPORT ORDERS FOR ASSESSEE WOULD NOT PART AKE CHARACTER OF FEES FOR TECHNICAL SERVICES AS EXPLAINED IN CONTEXT OF SECTION 9(1)(VII) AND THEREFORE, PROVISIONS OF SECTION 195 WOULD NOT APPLY. ACIT VS.MODERN INSULATORS LTD. [56 DTR 362 (JAIPUR TRIB.)] ISHIKAWAJAMA - HARLMA HEAVY INDUSTRIES LTD. VS. DIRECTOR OF INCOME TAX [207 CTR 361] DY. COMMISSIONER OF INCOME TAX VS. DLVI'S LABORATOR IES LTD. [(2011) 60 DTR (HYD) (TRIB) 210] ITO, INTERNATIONAL TAXATION, CHENNAI VS. PRASAD PRODUCTION [(2010) 125 ITD 263 CHENNAI) (SB) ACIT, CIRCLE - 16(3)(HYDERABAD-TRIB) VS. PRIYADARSH INI SPINNING MILLS (P.) LTD. (2012) ITA NO, 1776 (2011) ACIT (INTERNATIONAL TAXATION) VS. STAR CRUISE INDIA TRAVEL SERVICES PVT. LTD. [14 ITR (T) 282 (MUM.) CLSA LIMITED VS. ITO (INTERNATIONAL TAXATION) [56 S OT 254 (MUM.) ACIT VS. MODERAL INSULATORS LTD. [56 DTK 362 (ITAT, JAIPUR)] ISHIKAWAJAMA - HARIMA HEAVY INDUSTRIES LTD. VS. DIRECTOR OF INCOME TAX [207 CTR 361] DCIT VS. EON TECHNOLOGY PVT. LTD. [46 SOT 323 (DELH I ITAT) SUKANI ENTERPRISES VS. ACIT [ITA NO. 1330/MUM/2011] (ITAT, MUMBAI) IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 12 ITO VS. PIPAVAV SHIPYARD LIMITED [(2014) 42 TAXMANN.COM 159] ACIT 17(2), MUMBAI VS. VILAS N. TAMHANKAR (2015) [5 5 TAXMANN.COM 413] CIT V. VINAYAK EXPORTS 82 CCH 0032 (GUJ) (2012) CIT VS. FLUIDTHERM TECHNOLOGY (P.) LTD. (2015) 57 TAXMANN.COM 87(MADRAS) CIT VS. ORIENT EXPRESS (2015) 56 TAXMANN.COM 331 MADRAS) ASST. CIT V. INDIA SHOES EXPORTS (P.) LTD. (2015) 5 7 TAXMANN.COM 303 (CHENNAI - TRIB) INDO INDUSTRIES LTD. V. ITO (2015) 53 TAXMANN.COM 4 58 MUMBAI - TRIB.) KHIMJI VISRAM & SONS V. ADDL. CIT (2014) 52 TAXMANN.COM 485 (ITAT, MUMBAI) COMMISSIONER OF INCOME-TAX, CHENNAI V. FAIZAN SHOES (P.) LTD. [2014] 48 TAXMAN.COM 48 (MAD.) ASSISTANT COMMISSIONER OT INCOME-TAX, CO. CIRCLE - 1(3) V. COMEX EXPORTS (P) LTD. [2014] 45 TAXMANN.COM 406 (CHENNAI-TRIB.) ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCL E 111(2), CHENNAI V, T. ABDUL WAHID TANNERIES (P.) LT D. [2014] 47TAXMANN.COM 133 (CHENNAI TRI.) AJIT IMPEX VS. DCIT 46 TAXMANN.COM 163 [2014] PANKAJ A. SHAH VS. ITO, WARD - 1, BARODA [47 TAXMANN.COM 205(2014)] ZANAV HOME COLLECTION VS. JCIT, RANGE - 10, BANGALO RE [2015] 55 TAXMAN.COM 200 (BANGALORE TRIB.) ACIT VS. KARISHMA GLOBAL MINERALS PVT. LT D. [2015] 56 TAXMAN.COM 265 (PANAJI TRIB.) ACIT VS. SHIVA TEXYARN LTD. [2015] 53 TAXMAN.COM 495 (CHENNAI TRIB.) IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 13 3.13. IT IS ALSO WORTH HERE TO MENTION THAT IN APP ELLANT'S CASE, IN A. Y. 2012-13, THE DISALLOWANCE OF THE FOREIGN COMMISSION PAYMENTS MADE BY THE AO HAVE BEEN CONFIRMED FOR THE REASON THAT IN T HE SAID ASSESSMENT YEAR, THE APPELLANT HAS NOT PROVIDED VARIOUS DETAIL S AND EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE CLAIM OF EXPENDIT URE AND JUSTIFYING THE DETAILS OF NO OBLIGATION TO MAKE THE TDS UPON T HE SAID FOREIGN COMMISSION PAYMENTS. THEREFORE, IN ABSENCE OF SUCH DETAILS AND EVIDENCES, THE CLAIM OF THE APPELLANT WAS NOT ACCEP TED IN THAT YEAR. HOWEVER, IN THE YEAR UNDER CONSIDERATION, THE APPEL LANT HAS SUBMITTED ALL THE DETAILS AND EVIDENCES AS DISCUSSED IN THE P RECEDING PARAS, THEREFORE, THERE REMAINED NO REASON NOT TO ACCEPT SUCH CONTENTIONS. THUS, THE FACTS OF THE ISSUE IN THE YEAR UNDER CONS IDERATION ARE DIFFERENT FROM THAT OF A. Y. 2012-13. 3.14. IT IS ALSO WORTH HERE TO MENTION THAT IN THIS CASE AN ORDER U/S. 154 OF THE I.T. ACT HAS BEEN PASSED BY THE AO, REDUCING THE DISALLOWANCE ORIGINALLY MADE AT RS. 2,00,97,896/- TO RS. 1,62,09 ,377/-. THEREFORE, THE RELIEF IS GRANTED TO THE APPELLANT TO THE REDUC E FIGURE OF THE ADDITION WITH THE AO MAY VERIFY FROM THE ASSESSMENT RECORDS. IN VIEW OF THE AFORESAID DISCUSSION, THE GROUNDS OF THE APP EAL ARE ALLOWED , SUBJECT TO VERIFICATION. 4. IN THE RESULT, THE APPEAL IS ALLOWED . THE CIT(A) ACCORDINGLY ACCEPTED THE PLEA OF THE ASS ESSEE FOR ALLOWABILITY OF COMMISSION PAYMENTS. 5. THE AGGRIEVED REVENUE HAS PREFERRED APPEAL BEFOR E THE TRIBUNAL. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION TO SUPP ORT THE ORDER OF THE CIT(A). 6. WHEN THE MATTER WAS CALLED FOR HEARING THE LEAR NED DR FOR THE REVENUE RELIED UPON THE ORDER OF THE AO. 7. PER CONTRA THE LEARNED AR FOR THE ASSESSEE RELIE D UPON THE ORDER OF THE CIT(A) AND ALSO DOCUMENTARY EVIDENCES PLACED BY WAY OF PAPER BOOK AS WELL AS JUDICIAL PRONOUNCEMENTS VIZ. PR. CIT VS. NOVA TECHNOCAST PVT. LTD. [2018] 94 TAXMAN.COM 322 (GUJARAT); PR. C IT VS. MGM EXPORTS TAX APPEAL NO. 309 OF 2018 (GUJ.) JUDGMENT DATED 11 /04/2018; ABM STEELS (P.) LTD. VS ACIT (2016) 75 TAXMAN.COM 182 ( GUJ.) AND SEVERAL OTHER DECISIONS OF THE COORDINATE BENCH OF TRIBUNAL IN THIS REGARD. IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 14 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE MATERIAL REFERRED TO AND RELIED UPON AS WELL AS CASE LAWS CITED. THE SOLITA RY ISSUE IN CONTROVERSY IS WHETHER THE COMMISSION EXPENSES PAID TO NON-RESI DENT AGENTS AGAINST OVERSEAS SALE IS ALLOWABLE EXPENDITURE OR OTHERWISE HAVING REGARD TO THE PROVISIONS OF SECTION 37 OF THE ACT AND ALSO ON THE GROUND THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX DEDUCTED AT SOURC E UNDER SECTION 195 OF THE ACT. AS NOTED ABOVE, THE AO HAS DISPUTED THE B ONA FIDES OF COMMISSION PAYMENTS ON THE GROUND THAT SUCH COMMISS ION PAYMENTS ARE NOT SUPPORTABLE AND THE ASSESSEE HAS ALSO FAILED TO PROVE THE NATURE OF SERVICES RENDERED. THE AO ACCORDINGLY DISALLOWED T HE COMMISSION EXPENSES CLAIMED UNDER SECTION 37 OF THE ACT. THE AO HAS ALSO OBSERVED THAT THE ASSESSEE HAS FAILED TO DEDUCT TDS AS APPLICABLE TO IT. UNDER SECTION 195 OF THE ACT AND CONSEQUENTLY THE C OMMISSION EXPENSES ARE ALSO NOT DEDUCTABLE IN VIEW OF FAILURE TO DEDUC T TDS IN TERMS OF SECTION 40(A)(I) OF THE ACT. 9. AS REGARDS FIRST PLANK OF THE REVENUE FOR LACK O F BONA FIDES OF COMMISSION EXPENSES SO CLAIMED, WE OBSERVE THAT THE CIT(A) HAS TAKEN NOTE OF THE DETAILS OF COMMISSION EXPENSES, THE CER TIFICATE ISSUED BY THE CHARTERED ACCOUNTANT(CA) IN PRESCRIBED FORMAT FOR R EMITTANCE OF COMMISSION, COMMISSION AGREEMENT WITH VARIOUS COMMI SSION AGENTS, DECLARATION FROM THE COMMISSION AGENTS TOWARDS ABSE NCE OF THEIR PERMANENT ESTABLISHMENTS IN INDIA, BANK STATEMENT A S WELL AS COMPLETE SET OF E-MAILS OF THE COMMUNICATIONS EXCHANGED BY T HE AGENTS TOGETHER WITH INVOICE COPIES ETC.. BEFORE US ALSO, THE ASSES SEE HAS FILED THE LEDGER ACCOUNT OF EXPORT SALES AGAINST WHICH THE COMMISSIO N HAS BEEN PAID TOGETHER WITH OTHER EVIDENCES. THIS APART, THE CIT (A) ALSO OBSERVED THAT IN OWN CASE OF THE ASSESSEE RELEVANT THE ASSESSMENT YEAR 2010-11 THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE A SSESSEE IN SIMILAR IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 15 FACTS. THE CIT(A), IN THE CIRCUMSTANCES FOUND THAT THE BONA FIDES OF THE COMMISSION EXPENSES CANNOT BE DOUBLED. THE EXPENSES TOWARDS COMMISSION PAYMENTS WAS THUS RIGHTLY FOUND TO BE AL LOWABLE BUSINESS EXPENDITURE UNDER SECTION 37 OF THE ACT. IN THE LI GHT OF THE DETAILED EVIDENCES FILED BY THE ASSESSEE, IT IS DIFFICULT TO DISALLOW THE CLAIM OF THE COMMISSION PAYMENTS INCURRED IN ORDINARY COURSE OF BUSINESS. THEREFORE, WE CONCUR WITH THE VIEW TAKEN BY THE CIT (A) AND FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS SCORE. 10. AS NOTICED, THE AO HAS ALSO DECLINED THE DEDUCT IBILITY OF COMMISSION EXPENSES ON ACCOUNT OF NON-DEDUCTION OF WITHHOLDING TAX UNDER SECTION 195 OF THE ACT AND CONSEQUENTLY INVOK ED THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT TO DENY THE DEDUCTION O F EXPENSES FOR SUCH FAILURE. WE OBSERVE THAT CIT(A) HAS TAKEN NOTE OF P LETHORA OF JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS NOTICED THAT COMMISSI ON PAYMENTS TO NON-RESIDENT AGENTS FOR SERVICES RENDERED BY THEM O UTSIDE INDIA AND UTILIZED OUTSIDE INDIA FOR PROCURING EXPORT ORDERS FOR THE ASSESSEE IS NOT CHARGEABLE TO TAX IN INDIA AND CONSEQUENTLY THERE W AS NO OBLIGATION ON THE ASSESSEE TO DEDUCT TDS WHERE THE INCOME ARISING TO THE NON-RESIDENT BY WAY OF COMMISSION PAYMENTS IN ITSELF IS NOT CHAR GEABLE TO TAX IN INDIA. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE GUJARAT HIG H COURT IN THE CASE OF NOVA TECHNOCAST (SUPRA), MGM EXPORTS (SUPRA) AS WELL AS ABM STEELS (SUPRA). THE COMMISSION BEING IN THE NATURE OF INCOME ACCRUED FROM SERVICES RENDERED OUTSIDE INDIA, SUCH PAYMENTS HAS NO TAX IMPLICATIONS IN INDIA IN THE HANDS OF NON-RESIDENTS . THIS BEING SO, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). THE C IT(A) HAS RIGHTLY CONCLUDED THAT COMMISSION PAYMENTS TO NON-RESIDENTS TOWARDS OVERSEAS SALES IS NOT SUSCEPTIBLE TO TAKE IN INDIA AND THERE FORE SECTION 195 HAS NO OBLIGATION AND CONSEQUENTLY SECTION 40(A)(I) DOES N OT GET TRIGGERED. WE THUS DECLINE TO INTERFERE. IT NO. 112/AHD/2017 A.YR. 2013-14 CO. NO. 32/AHD/20 17 16 11. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMI SSED. 12. THE CROSS OBJECTION IS MERELY SUPPORTIVE IN NAT URE AND DOES NOT CHALLENGE THE ORDER OF THE CIT(A) PER SE . THE CROSS OBJECTION, IN THE CIRCUMSTANCES, IS INFRUCTUOUS AND IS THEREFORE DISM ISSED. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 08/02/2019 TRUE COPY TANMAY / COPY OF ORDER FORWARDED TO:- 1. '# / REVENUE 2. / ASSESSEE 3. $$ % / CONCERNED CIT 4. % - / CIT (A) 5. &'( )** , , / DR, ITAT, AHMEDABAD 6. (+, / GUARD FILE. BY ORDER / , / $' , THIS ORDER PRONOUNCED IN OPEN COURT ON 08/02/2019