M/s. Satyam Polyplast, Jaipur V. Assistant Commissioner of Income Tax, Circle-4, Jaipur

ITA 158/JPR/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5696 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 11-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.C. MEENA ACIT
• Keywords: Capital asset converted into stock in trade; Double taxation relief; Services rendered outside India; Advance ruling; TDS
• Section: 139; 5(2); 195; 201; 43

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH JESK LH0 KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH. C. SHARMA, AM & SHRI VIJAY PA L RAO, JM VK;DJ VIHY LA- @ ITA NO. 158/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2015-16 SATYAM POLYPLAST G-1/41, VKI AREA EXTENSION, BADHARANA, JAIPUR. 302013. CUKE VS. THE DCIT, CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AASFS 7334 R VIHYKFKHZ@ APPELLAN T IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI V.K. JAIN (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. MEENA (ACIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/05/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 14/05/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.12.2018 OF THE LD. CIT(A), AJMER FOR THE ASSESSM ENT YEAR 2015-16. THE SOLITARY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN SUSTAINING ADDITION OF RS. 38,92,787/- BEING DISALLOWANCE OF COMMISSION PAID T O NON RESIDENTS U/S 40(A)(IA). THEREFORE BEING NO LIABILI TY TO DEDUCT TAX AT SOURCE DISALLOWANCE MADE IS ILLEGAL AND ADDITION OF RS. 38,92,787/- MADE DESERVES TO BE DELETED. ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 2 2. THE ASSESSEE IS PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF PP BAGS. DURING THE ASSESSMENT PRO CEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS PAID COMMISSION OF RS. 38,92,787/- TO VARIOUS NONRESIDENT ENTITIES WITHOUT MAKING TDS. AC CORDINGLY, THE AO HAS PROPOSED TO MAKE DISALLOWANCE OF THE SAID COMMI SSION BY INVOKING THE PROVISIONS OF SECTION 40(A)(I) R.W.S. 195 OF TH E ACT. IN RESPONSE THE ASSESSEE SUBMITTED THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF EXPORT OF ITS FINAL PRODUCTS AND FOR THIS PURPOSE, THE ASS ESSEE HAS TIE UP WITH NON-RESIDENT PERSONS FOR PROCURING THE SALES ORDERS ON BEHALF OF THE ASSESSEE. AFTER EXPORTING THE GOODS AND RECEIVING T HE PAYMENT IN FOREIGN CURRENCY, THE ASSESSEE PAID COMMISSION TO S UCH NON-RESIDENT PERSONS FOR SERVICES RENDERED OUTSIDE INDIA. THUS T HE ASSESSEE CONTENDED THAT THE PAYMENT MADE BY THE ASSESSEE TO NON-RESIDENT IS NOT LIABLE TO TAX IN INDIA AND THEREFORE, THE ASSES SEE WAS UNDER NO OBLIGATION TO DEDUCT TDS AND CONSEQUENTLY THE PROVI SIONS OF SECTION 40(A)(I)OF THE ACT CANNOT BE INVOKED. THE AO DID NO T ACCEPT THIS CONTENTION OF THE ASSESSEE AND REFERRED TO THE EXPL ANATION II OF SECTION 195 (1) OF THE ACT INSERTED BY FINANCE ACT, 2012 ON THE POINT THAT WHETHER THE NON-RESIDENT PERSON HAS PLACED OF BUSIN ESS OR BUSINESS CONNECTION IN INDIA THE PROVISIONS OF SECTION 195(1 ) ARE APPLICABLE. THE ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 3 AO ACCORDINGLY, HELD THAT THE PROVISIONS OF SECTION 195(1) ARE APPLICABLE IN ALL THE CASES WHETHER THE PAYMENT IS MADE TO NON -RESIDENT WITHOUT DEDUCTION OF TDS AND CONSEQUENTLY THE PROVISIONS OF SECTION 40(A)(I)ARE ATTRACTED. THE AO THEN PROCEEDED TO HOLD THAT THE P AYMENT IN QUESTION IS FEE FOR TECHNICAL SERVICES (FTS) AS THE ASSESSEE HAS MADE THIS PAYMENT FOR RENDERING MANAGERIAL OR CONSULTANCY SER VICES BY THE NON- RESIDENT PERSONS. THE AO ACCORDINGLY DISALLOWED THE SAID AMOUNT OF RS. 38,92,787/- U/S 40(A)(I)OF THE ACT. THE ASSESSEE C HALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) BUT COULD NOT SUCCE ED. THE LD. CIT(A) WAS OF THE VIEW THAT THERE IS NO FINDING BY ANY AUT HORITY THAT THE SAID PAYMENT WAS NOT CHARGEABLE TO TAX UNDER INCOME TAX ACT. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS REITER ATED ITS CONTENTION AS RAISED BEFORE THE AUTHORITIES BELOW AND SUBMITTE D THAT THE PAYMENT OF COMMISSION TO NON-RESIDENT IS NOT CHARGEABLE TO TAX IN INDIA AND CONSEQUENTLY THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX ON SUCH AMOUNT. THEREFORE, THE PROVISIONS OF SECTION 40(A)(I) OF TH E ACT CANNOT BE INVOKED IN THE CASE OF THE ASSESSEE. HE HAS RELIED UPON A SERIES OF DECISIONS AND SUBMITTED THAT THE COURTS HAVE CONSIS TENTLY HELD THAT THE PAYMENT OF COMMISSION TO NON-RESIDENT IS NOT LIABLE TO TAX IN INDIA WHEN THE NON-RESIDENT HAS NO P.E. IN INDIA. HE HAS REFERRED TO THE ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 4 ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 201 3-14 AND SUBMITTED THAT THE LD. CIT(A) HAS DELETED AN IDENTICAL DISALL OWANCE MADE BY THE AO BY FOLLOWING DECISION OF HONBLE DELHI HIGH COUR T IN CASE OF CIT VS. EON TECHNOLOGIES (P) LTD. 343 ITR 366 AS WELL AS TH E DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN CASE OF ARMAYESH GLOBAL VS. ACIT 51 SOT 564. THE LD. AR HAS ALSO RELIED UPON THE FOLLOW ING DECISIONS:- CIT VS. FLUIDTHERM TECHNOLOGY (P) LTD. (2015 TAXMAN .COM 87 (MADRAS). CIT VS. FAIZAN SHOES (P) LTD. 367 ITR 155. CIT VS. GUJARAT RECLAIM RUBBER PRODUCTS (P) LTD. ( MUMBAI HIGH COURT.) CIT VS. TOSHUKU LTD. 125 ITR 525(SC) CIT VS. SEA RESOURCES LTD. (BOMBAY HIGH COURT) ITO VS. EXCEL CHEMICAL INDIA LTD. (AHMEDABAD BENCH) . ACIT VS. PAHILAJRAI JAIKISHAN (MUMBAI BENCH). 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT AS PER PROVISIONS OF SECTION 195 OF THE ACT THE ASSESSEE I S UNDER OBLIGATION TO DEDUCT TAX AT SOURCE FOR MAKING THE PAYMENT TO NON- RESIDENT. IN CASE THE ASSESSEE WAS HAVING THE BELIEF THAT THE AMOUNT IN QUESTION IS NOT CHARGEABLE TO TAX IN INDIA THEN THE ASSESSEE WOULD HAVE APPLIED FOR SUCH EXEMPTION U/S 195(2) OF THE ACT. IN THE ABSENC E OF SUCH FINDING THE ASSESSEE HAS DEFAULTED IN MAKING DEDUCTING OF T DS AND ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 5 CONSEQUENTLY THE PROVISIONS OF SECTION 40(A)(I)OF T HE ACT ARE ATTRACTED IN THIS CASE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PAID COMMISSIO N TO NON-RESIDENT PERSONS AGAINST THE SERVICE OF PROCURING ORDERS FOR THE ASSESSEE. THE DETAILS OF THE COMMISSION PAID BY THE ASSESSEE ARE AS UNDER:- S. NO. NAME OF AGENT ADDRESS COMMISSION 1. MR. CLAUDIO HABERL A/C AV. SESQUICENTENARIO 4540 CP1613, BUENOS AIRES, ARGENTINA 22,06,46,7.00 2. MD. HABIBUR RAHMAN KALIBARL, AZIZABAD, PATHARGHATA BARGUNA 3,31,442.00 3. NADIA ANWAR HASAN ALI AL - SHEKH, OTHMAN, SNAFER BUILDING YEMEN 4,68,120.00 4. REINHARD BOSSE UND GESCHAFTSKUNDEN AG, BAHNHOFSTRABE 17,49525 LENGERICH, GERMANY 7,10,060.00 5. SHAMLAN NASEER ALI DOHA, QATAR, YEMEN 1,76,698.00 TOTAL 38,92,787.00 THE AO HAS DISALLOWED THE SAID AMOUNT U/S 40(A)(I)O N THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE AS REQUIRED U/S 195(1) OF THE ACT. THE AO HAS GIVEN MUCH EMPHASIS TO EXPLA NATION-II TO SECTION 195(1) OF THE ACT. THE AO ALSO HELD THAT TH E PAYMENT IN QUESTION IS FEE FOR TECHNICAL SERVICES (FTS) BECAUS E THE NON-RESIDENTS HAVE RENDERED THE SERVICE OF MANAGERIAL IN THE NATU RE WHICH FALLS IN THE AMBIT OF DEFINITION OF FEE FOR TECHNICAL SERVICES U /S 9A(1)(VII) OF THE ACT. IT IS PERTINENT TO NOTE THAT THE PROVISIONS OF SECTION 40(A)(I) CAN BE APPLIED ONLY RESPECT OF SUM PAYABLE OR PAID TO A NO N-RESIDENT TOWARDS ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 6 INTEREST, ROYALTY OR FEE FOR TECHNICAL SERVICES (FT S) OR OTHER SUM CHARGEABLE UNDER THIS ACT WHICH IS PAYABLE TO NON-R ESIDENT. FOR READY REFERENCE WE QUOTE THE PROVISIONS OF SECTION 40(A)( I) OF THE ACT AS UNDER:- C HARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSI NESS OR PROFESSION', (A ) IN THE CASE OF ANY ASSESSEE 42 [(I) 43 44 ANY INTEREST (NOT BEING INTEREST ON A LOAN ISSUED F OR PUBLIC SUBSCRIPTION BEFORE THE 1ST DAY OF APRIL, 19 38), ROYALTY, FEES FOR TECHNICAL SERVICES OR OTHE R SUM CHARGEABLE UNDER THIS ACT, WHICH IS PAYABLE, (A ) OUTSIDE INDIA; OR (B ) IN INDIA TO A NON- RESIDENT, NOT BEING A COMPANY OR TO A FOREIGN COMPANY, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII- B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID 45 [ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 ] : 46 [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BE EN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER TH E DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 , SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE IN COME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID.] EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE, ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 7 (A ) 'ROYALTY' SHALL HAVE THE SAME MEANING AS IN EXPLANATION2 TO CLAUSE (VI) OF SUB- SECTION (1) OF SECTION 9 ; (B ) 'FEES FOR TECHNICAL SERVICES' S HALL HAVE THE SAME MEANING AS IN EXPLANATION2 TO CLAUSE (VII) OF SUB - SECTION (1) OF SECTION 9 ; THE PAYMENT IN QUESTION IS COMMISSION AND PRIMA FA CIE NOT ROYALTY OR FEE FOR TECHNICAL SERVICES (FTS). THE AO THOUGH OBS ERVED THAT THE PAYMENT IN THE NATURE OF FTS, HOWEVER THE AO HAS NO T EXAMINED OR NOT GIVEN THE FINDING AS TO HOW THE PAYMENT IN QUES TION IS FTS AND WHAT IS THE NATURE OF SERVICE RENDERED BY THE NON-R ESIDENT. EVEN OTHERWISE THE ISSUE OF FTS HAS TO BE CONSIDERED IN LIGHT OF DEFINITION PROVIDED IN RESPECT THE DTAA. WE FIND THAT THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2013-14 HAS CLEARLY GIVEN A FINDING THAT THE PAYMENT IN QUESTION IS NOT FEE FOR TECHNICAL SERVICES BUT I T IS A REGULAR PAYMENT TO THE NON-RESIDENT IN THE NATURE OF ORDINARY COURS E OF BUSINESS. EVEN OTHERWISE THE LD. CIT(A) HAS UPHELD THE ORDER OF TH E AO ONLY ON THE GROUND THAT AS PER THE EXPLANATION-II OF SECTION 19 5(1) OF THE ACT THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT THE TAX AT SOURCE FOR MAKING THE PAYMENT OF COMMISSION TO NON-RESIDENT. THEREFOR E, THE LD. CIT(A) HAS ACCEPTED THE NATURE OF PAYMENT AS COMMISSION AN D NOT FEE FOR ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 8 TECHNICAL SERVICE. THE RELEVANT FINDING OF THE LD. CIT(A) IN PARA 4.3 AS UNDER:- 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STAT EMENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS CA REFULLY. IT IS SEEN THAT THE AO AFTER DISCUSSING THE PROVISIONS OF SECTION 195, INCLUDING THE EXPLANATION 2, HAS CONCLUDED THAT THE APPELLANT WAS REQUIRED TO DEDUCT THE TAX AT SOURCE WHILE MAKING T HE PAYMENT OF ABOVE REFERRED EXPENSES EVEN, TO THE NON-RESIDENT P ERSONS, WHETHER OR NOT THE NON-RESIDENT PERSON HAD A RESIDE NCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA OR ANY OTHER PRESENCE IN ANY MANNER WHATSOEVER IN INDIA. THE EXPLANATION 2 HAS BEEN INSERTED BY THE FINANCE ACT OF 2012 WITH RETROSPECT IVE EFFECT FROM 01.04.1962. I AM OF THE CONSIDERED VIEW THAT THE AR GUMENT OF THE APPELLANT THAT SINCE THE NON-RESIDENT PERSONS WHOM THE PAYMENTS WERE MADE DID NOT HAVE PLACE OF BUSINESS O R BUSINESS CONNECTION IN INDIA, THEREFORE, THE APPELLANT WAS N OT REQUIRED TO DEDUCT TAX AT SOURCE ON THE ABOVE REFERRED PAYMENTS , IS NOT CORRECT. REGARDING THE SECOND ARGUMENT OF THE APPEL LANT THAT THE INCOME OF THE RECIPIENTS OF THE ABOVE REFERRED EXPE NSES WAS NOT SUM CHARGEABLE UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 THEREFORE THE PROVISIONS OF SECTION 195(1) ARE NOT APPLICABLE TO THESE PAYMENTS THE A/R OF THE APPELLANT WAS SPECIF ICALLY REQUESTED TO CLARIFY WHETHER ANY RULING WAS OBTAINE D FROM THE AUTHORITY FOR ADVANCE RULING U/S 245(2), REGARDING NON TAXABILITY OF THE INCOME OF THE RECIPIENT IN INDIA UNDER THE I NCOME TAX ACT. THE A/R SUBMITTED THAT NO SUCH RULING WAS OBTAINED FROM AAR BY THE RECIPIENTS OF THE ABOVE REFERRED EXPENSES. THER E IS NO OTHER EVIDENCE ON RECORD TO SHOW THAT THE SUM RECEIVED BY THE NON- RESIDENTS IN THE FORM OF SELLING COMMISSION (RS. 38 ,92,787/-) WAS NOT CHARGEABLE TO TAX UNDER THE INCOME TAX ACT. THE RE IS NO ORDER OR FINDING BY ANY INCOME TAX AUTHORITY THAT T HE ABOVE REFERRED SUM OF RS. 38,92,787/- WAS NOT CHARGEABLE TO TAX UNDER I. T. ACT, 1961. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 9 APPELLANT WAS REQUIRED TO DEDUCT TAX AT SOURCE WHIL E MAKING PAYMENT OF SELLING COMMISSION ( RS. 38,92,787/-) TO NON-RESIDENT, WHETHER OR NOT THE NON-RESIDENT HAD A RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA. THE DECIS ION RELIED UPON BY THE APPELLANT ARE APPLICABLE ONLY WHEN THERE IS EVIDENCE ON RECORD TO SHOW THAT THE SUM PAID BY THE ASSESSEE WA S NOT CHARGEABLE TO TAX UNDER THE INCOME TAX ACT. THEREFO RE, DISALLOWANCE OF RS. 38,92,787/- MADE BY THE AO IS H EREBY CONFIRMED. ONCE THE PAYMENT IN QUESTION IS COMMISSION THEN THE PROVISIONS OF SECTION 40 (A)(I) OF THE ACT ARE APPLICABLE ONLY IF SUCH SUM IS CHARGEABLE TO TAX UNDER THIS ACT. AS PER PROVISIONS OF SECTION 5(2) OF THE ACT THE TOTAL INCOME OF NON-RESIDENT INCLUDES ALL INCOME FR OM WHATSOEVER SOURCES DERIVED WHICH IS RECEIVED OR DEEMED TO BE R ECEIVED IN INDIA ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE T O HIM IN INDIA DURING SUCH YEAR. FOR READY REFERENCE WE QUOTE TO SECTION 5(2) REPRODUCED AS UNDER:- 5 (2) SUBJECT TO 11 THE PROVISIONS OF THIS ACT, THE TOTAL INCOME 12 OF ANY PREVIOUS YEAR OF A PERSON WHO IS A NON-RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED WHICH (A ) IS RECEIVED 14 OR IS DEEMED TO BE RECEIVED IN INDIA IN SUCH YE AR BY OR ON BEHALF OF SUCH PERSON ; OR (B ) ACCRUES OR ARISES 14 OR IS 14 DEEMED TO ACCRUE OR ARISE TO HIM IN INDIA DURING SUCH YEAR. ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 10 EXPLANATION 1.INCOME ACCRUING OR ARISING OUTSIDE I NDIA SHALL NOT BE DEEMED TO BE RECEIVED 14 IN INDIA WITHIN THE MEANING OF THIS SECTION BY REASON ONLY OF THE FACT THAT IT IS TAKEN INTO ACCOU NT IN A BALANCE SHEET PREPARED IN INDIA. EXPLANATION 2.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT INCOME WHICH HAS BEEN INCLUDED IN THE TOTAL INCOME OF A PERSON ON THE BASIS THAT IT HAS ACCRUED 15 OR ARISEN 15 OR IS DEEMED TO HAVE ACCRUED 15 OR ARISEN 15 TO HIM SHALL NOT AGAIN BE SO INCLUDED ON THE BASIS THAT IT IS RECEIVED OR DEEMED TO BE RECEIVED BY HIM IN INDIA. THEREFORE, COMMISSION PAID TO NON-RESIDENT OUTSIDE INDIA FOR THE SERVICES RENDERED OUTSIDE INDIA WILL NOT FALL IN TH E CATEGORY OF THE INCOME RECEIVED FOR DEEMED OR RECEIVED IN INDIA AS WELL AS ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE IN INDIA. TH US, THE SAID AMOUNT PAID TO NON-RESIDENT DOES NOT FALL IN THE SCOPE OF TOTAL INCOME OF NON- RESIDENT AND CONSEQUENTLY IT IS NOT CHARGEABLE TO T AX IN INDIA UNDER THE PROVISIONS OF THE ACT. EVEN OTHERWISE THE SAID INCO ME IN THE HANDS OF NON-RESIDENT HAS TO BE CONSIDERED IN THE LIGHT OF T HE PROVISIONS OF DTAA BETWEEN INDIA AND THE COUNTRY OF THE NON-RESIDENT. IN THE ABSENCE OF P.E. OF THE NON-RESIDENT IN INDIA SUCH BUSINESS INC OME IS NOT CHARGEABLE TO TAX IN INDIA. ACCORDINGLY, IN THE FACTS AND CIRC UMSTANCES OF THE CASE WHEN THE AMOUNT PAID BY THE ASSESSEE IS NOT CHARGEA BLE TO TAX IN INDIA THEN THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS AND C ONSEQUENTLY THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT CANNOT BE INVOKED FOR MAKING ITA NO. 158/JP/2019 SATYAM POLYPLAST VS. DCIT 11 THE DISALLOWANCE. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DISALLOWANCE MADE BY THE AO U/S 40(A)(I) OF THE ACT IS DELETED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/05/2019. SD/- SD/- JESK LH0 KEKZ FOT; IKY JKO (RAMESH. C. SHARMA) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14/05/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SATYAM POLYPLAST, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 158/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR