The ITO, Ward-2(1)(1), Ahmedabad V. M/s. Excel Chemicals India Ltd., Ahmedabad

ITA 5/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0980 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 01-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHSIH POHARE
• Assessee Lawyers: ASSESSING OFFIC ER DHIREN SHAH
• Keywords: Deemed to accrue or arise in india; Permanent establishment; Advance ruling; Non-deduction of tax
• Section: 143(3)

Judgement Text

CO NO. 29/AHD/2016 I.T.A. NO.5/AHD/2016 ASSESSMENT YEAR: 2012 - 13 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD I BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO. 5/AHD/16 ASSESSMENT YEAR: 2012 - 13 INCOME TAX OFFICER WARD 2(1)(1), AHMEDABAD ............ .APPELLANT VS. EXCEL CHEMICALS INDIA LIMITED .. . . RESPONDENT A 303, SAFAL PEGASUS TOWER , ANANDNAAR ROAD, PRAHLADNAGAR , AHMEDABAD 380015 [PAN: AABCE7150P] CO NO. 29 /AHD/201 6 ARISING OUT OF I.T.A. NO. 5 /AH D/2016 ASSESSMENT YEAR: 2012 - 13 EXCEL CHEMICALS INDIA LIMITED .......... ... CROSS OBJECTOR A 303, SAFAL PEGASUS TOWER , ANANDNAAR ROAD, PRAHLADNAGAR , AHMEDABAD 380015 [PAN: AABCE7150P] VS. INCOM E TAX OFFICER WARD 2(1)(1),AHMEDABAD .. . . RESPONDENT APPEARANCES BY: ASHSIH POHARE FOR THE APPELLANT ASSESSING OFFIC ER DHIREN SHAH FOR THE RESPONDENT ASSESSEE DATE OF CONCLUDING THE HEARING : JUNE 07 , 2016 DATE OF PRONOUNC ING THE ORDER : JULY 29 TH , 2016 O R D E R PER PRAMOD KUMAR , AM : 1. THIS APPEAL, FILED BY THE ASSESSING OFFICER, SEEKS TO CHALLENGE THE ORDER DATED 12 TH OCTOBER, 2015 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2012 - 13. CO NO. 29/AHD/2016 I.T.A. NO.5/AHD/2016 ASSESSMENT YEAR: 2012 - 13 PAGE 2 OF 7 2. GRIEVANCE OF THE ASSESSING OFFICER, AS SET OUT IN THE MEMORANDUM OF APPEAL, IS AS FOLLOWS: THE LEARN ED CIT(A) HAS ERRED, IN LAW AND ON FACTS, IN DELETING THE DISALLOWANCE OF RS 51,79,355 MADE ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES UNDER SECTION 40(A)(I) OF THE ACT, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND MATERIAL ON RECORD. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN OF. THE ASSESSEE BEFORE US IS A RESIDENT COMPANY ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS 58,73,635 IN RESPECT OF THE COMMISSION PAID, OUT OF WHICH SUMS AGGREGATING TO RS 51,79,355 WERE PAID TO BE NON - RESIDENT ENTITIES WITHOUT ANY TAX WITHHOLDING AT SOURCE. IN RESPONSE TO THE ASSESSING OFFICER S REQUISITION TO SHOW CAUSE AS TO WHY THESE PAYMENTS NOT BE DISALLOWED UNDER SECTION 40(A)(I), FOR WANT OF APPROPRIATE TAX WITHHOLDING AT SOURCE, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SALE COMMISSION WAS PAID IN RESPECT OF SERVICES RENDERED ABROAD, AN D, AS SUCH, NO TAX WAS DEDUCTIBLE AT SOURCE. SINCE THERE WAS NO TAX DEDUCTION AT SOURCE IN REQUIREMENT, ACCORDING TO THE ASSESSEE, THERE COULD NOT HAVE BEEN ANY OCCASION TO INVOKE DISALLOWANCE UNDER SECTION 40(A)(I). THE ASSESSEE ALSO REFERRED TO, AND RELI ED UPON, CERTAIN JUDICIAL PRECEDENTS IN SUPPORT OF THE PROPOSITION THAT UNLESS THE RECIPIENT OF COMMISSION IS CARRYING ON BUSINESS IN INDIA, THROUGH A PERMANENT ESTABLISHMENT, THE SALES COMMISSION SO PAID TO NON - RESIDENT ENTITIES IS NOT TAXABLE IN INDIA. N ONE OF THESE SUBMISSIONS, HOWEVER, IMPRESSED THE ASSESSING OFFICER. THE ASSESSING OFFICER NOTED THAT UNDER SECTION 5(2)(B) OF THE ACT, A NON - RESIDENT ASSESSEE IS TAXABLE IN INDIA IN RESPECT OF ALL HIS INCOMES ACCRUING OR ARISING IN INDIA AND INCOMES DEEM ED TO ACCRUE OR ARISE IN INDIA, AND THAT, BY THE VIRTUE OF DEEMING FICTION UNDER SECTION 9(1)(I), INCOME ACCRUING OR ARISING IN INDIA, DIRECTLY OR INDIRECTLY THROUGH ANY BUSINESS CONNECTION IN INDIA OR THROUGH ANY SOURCE OF INCOME IN INDIA, SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA. HE THEN REFERRED TO A RULING OF HON BLE AUTHORITY FOR ADVANCE RULING, IN THE CASE OF SKF BOILERS AND DRIERS PVT LTD IN RE [(2012) 343 ITR 385 (AAR)] IN SUPPORT OF THE CO NO. 29/AHD/2016 I.T.A. NO.5/AHD/2016 ASSESSMENT YEAR: 2012 - 13 PAGE 3 OF 7 PROPOSITION THAT COMMISSION REMITTED ABROAD TO NON - RESIDEN T AGENT RENDERING SERVICES ABROAD, WAS INCOME ACCRUING OR ARISING IN INDIA, AND THE FACT THAT THE NON - RESIDENT AGENT RENDERED SERVICES ABROAD WAS WHOLLY IRRELEVANT FOR THE PURPOSE OF DETERMINING SITUS OF THEIR INCOME. IT WAS ALSO, ACCORDING TO THE ASSESSIN G OFFICER, HELD IN THE SAID CASE THAT SINCE THE RIGHT TO COMMISSION AROSE IN INDIA, FOR THE SIMPLE REASON THAT THE ORDERS WERE EXECUTED IN INDIA. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE FACTS OF THE ASSESSEE S CASE ARE IDENTICAL TO THE AFORE CITED CASE SINCE ASSESSEE WAS LIABLE TO PAY THE EXPORT COMMISSION TO NON - RESIDENT FOR EXPORT ORDER FROM ABROAD, BUT THE ORDERS WERE EXECUTED FROM INDIA . A REFERENCE WAS THEN MADE TO EXPLANATION 4 TO SECTION 9(1)(I), INTRODUCED BY THE FINANCE ACT 2012 W.R.E.F 1 ST APRIL 1962, THAT THE EXPRESSION THROUGH SHALL MEAN TO INCLUDE, AND SHALL ALWAYS BE DEEMED TO HAVE INCLUDED, BY MEANS OF , IN CONSEQUENCE OF AND BY REASON OF . THE CLAIM OF THE ASSESSEE THAT THE INCOME DID NOT ACCRUE OR ARISE IN INDIA WAS THUS R EJECTED. AS REGARDS THE RELIANCE ON THE CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT, CERTIFYING THAT NO TAX DEDUCTION AT SOURCE WAS WARRANTED FROM THE REMITTANCES FOR COMMISSION, THE ASSESSING OFFICER RELIED UPON DECISION OF THE TRIBUNAL, IN THE CASE OF DCIT VS REDIFF.COM INDIA LIMITED [(2011) 47 SOT 310 (MUM)] IN SUPPORT OF THE PROPOSITION THAT SUCH A CERTIFICATE CANNOT BE CONCLUSIVE DETERMINATION OF TAXABILITY IN THE HANDS OF THE RECIPIENT. AS REGARDS ALL THE JUDICIAL PRECEDENTS CITED BY THE ASSESSEE, THE ASSESSING OFFICER REJECTED THE SAME BY OBSERVING THAT VARIOUS DECISIONS CITED BY THE ASSESSEE, CBDT CIRCULAR NO. 786 BY WAY OF NEW CIRCULAR 7 OF 2009 DATED 22/10/2009 WHEREBY ALL THE PAYMENTS TO NON - RESIDENTS WITHOUT DEDUCTION OF TAX AT SOURCE HA VE B EEN WITHDRAWN . ON THE BASIS OF THIS LINE OF REASONING, THE ASSESSING OFFICER HELD THAT THE COMMISSION PAID TO NON - RESIDENT AGENTS, AMOUNTING TO RS 51,79,355, IS TO BE DISALLOWED UNDER SECTION 40(A)(I). AGGRIEVED, ASSESSEE CARRIED THE MATT ER IN APPEAL BEF ORE THE CIT(A) WHO DELETED THE DISALLOWANCE BY HOLDING THAT THE INCOME WAS NOT TAXABLE IN INDIA, AS NO OPERATIONS WERE CARRIED OUT IN INDIA, AND THAT, SINCE NO INCOME WAS TAXABLE IN INDIA, THERE COULD NOT HAVE BEEN ANY OCCASION TO DEDUCT TAX AT SOURCE FROM THE REMITTANCES IN QUESTION. LEARNED CIT(A) FURTHER HELD THAT THE ADVANCE RULING RELIED UPON BY THE ASSESSING OFFICER, I.E. SKF BOILERS (SUPRA) AND RAJEEV MALHOTRA IN RE [(2006) 284 ITR 564 (DEL)] DID NOT APPLY TO THE FACTS OF THIS CASE. THE DISALLOWANCE WAS THUS DELETED. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. CO NO. 29/AHD/2016 I.T.A. NO.5/AHD/2016 ASSESSMENT YEAR: 2012 - 13 PAGE 4 OF 7 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTS OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 5. THE BASIC CONTENT ION OF THE ASSESSING OFFICER IS THAT IN VIEW OF THE SCOPE OF DEEMING FICTION UNDER SECTION 9(1)(I) , WHICH INTER ALIA HOLDS THAT ANY INCOME ARISING DIRECTLY OR INDIRECTLY FROM ANY BUSINESS CONNECTION IN INDIA WILL BE DEEMED TO ACCRUE OR ARISE IN INDIA, RE AD WITH THE SCOPE OF CHARGING SECTION 5(2), WHICH ENABLES TAXABILITY OF A NON - RESIDENT IN RESPECT OF INCOME ACCRUING OR ARISING OR DEEMED TO ACCRUE OR ARISE, IN INDIA,, INCOME ARISING IN T HE HANDS OF THE NON - RESIDENT COMMISSION AGENT IS TAXABLE IN INDIA . WHAT HE OVERLOOKS, HOWEVER, IS THE IMPACT OF EXPLANATION 1 TO SECTION 9 (1)(I) WHICH STATES THAT F OR THE PURPOSE OF THIS CLAUSE [I.E. 9(1)(I)], IN THE CASE OF A BUSINESS OF WHICH ALL THE OPERATIONS ARE NOT CARRIED OUT IN INDIA, THE INCOME OF THE BUSINESS DEEMED UNDER THIS CLAUSE TO ACCRUE OR ARISE IN INDIA SHALL BE ONLY SUCH PART OF THE INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA . ONLY IF HE WAS TO TAKE INTO ACCOUNT THE SCOPE OF EXPLANATION 1 TO SECTION 9(1)(I), COUPLED WI TH THE FACT THAT ADMITTEDLY NO PART OF OPERATIONS OF THE NON - RESIDENT COMMISSION AGENT WERE CARRIED OUT IN INDIA, HE WOULD HAVE REALIZED THAT EVEN THOUGH DEEMING F ICTION UNDER SECTION 9(1)( I ) IS TRIGGERED ON THE FACTS OF THIS CASE, ON ACCOUNT OF COMMISSION AGENT S BUSINESS CONNECTION IN INDIA, IT HAS NO IMPACT ON TAXABILITY IN THE HANDS OF COMMISSION AGENT BECAUSE ADMITTEDLY NO BUSINESS OPERATIONS WERE CARRIED OUT IN INDIA, AND, THEREFORE EXPLANATION 1 TO SECTION 9(1)(I) COMES INTO PLAY. THE SEEMINGLY ERUDI TE ANALYSIS BY THE ASSESSING OFFICER IS BASED ON A HALF - BAKED LEGAL THEORY, AND THE CONCLUSIONS, THEREFORE, CLEARLY FALLACIOUS. 6. AS FOR THE AAR RULING IN THE CASE OF SKF BOILERS (SUPRA), ON WHICH SO MUCH RELIANCE HAS BEEN PLACED BY THE ASSESSING OFFI CER, WE FIND THAT THIS DECISION MERELY FOLLOWS THE EARLIER RULING IN THE CASE OF RAJIV MALHOTRA (SUPRA) WHICH, IN OUR CONSIDERED VIEW, DOES NOT TAKE INTO ACCOUNT THE IMPACT OF EXP LANATION 1 TO SECTION 9(1)(I) PROPERLY . THAT WAS A CASE IN WHICH THE NON - RES IDENT COMMISSION AGENT WORKED FOR PROCURING PARTICIPATION BY OTHER NON - RESIDENT ENTITIES IN A FOOD AND WINE SHOW IN INDIA, AND THE CLAIM OF THE ASSESSEE WAS THAT SINCE THE AGENT HAS NOT CARRIED CO NO. 29/AHD/2016 I.T.A. NO.5/AHD/2016 ASSESSMENT YEAR: 2012 - 13 PAGE 5 OF 7 OUT ANY BUSINESS OPERATIONS IN INDIA, THE COMMISSION AGENT WA S NOT CHARGEABLE TO TAX IN INDIA, AND, ACCORDINGLY, THE ASSESSEE HAD NO OBLIGATION TO DEDUCT TAX AT SOURCE FROM SUCH COMMISSION PAYMENTS TO THE NON - RESIDENT AGENT. ON THESE FACTS, THE AUTHORITY FOR ADVANCE RULING, INTER ALIA, OPINED THAT NO DOUBT THE AGE NT RENDERS SERVICES ABROAD AND PURSUES AND SOLICITS EXHIBITORS THERE IN THE TERRITORY ALLOTTED TO HIM, BUT THE RIGHT TO RECEIVE THE COMMISSION ARISES IN INDIA ONLY WHEN EXHIBITOR PARTICIPATES IN THE INDIA INTERNATIONAL FOOD & WINE SHOW (TO BE HELD IN INDIA ), AND MAKES FULL AND FINAL PAYMENT TO THE APPLICANT IN INDIA AND THAT THE COMMISSION INCOME WOULD, THEREFORE, B E TAXABLE UNDER SECTION 5(2)(B) READ WITH SECTION 9(1)(I) OF THE ACT . THE AUTHORITY FOR ADVANCE RULING ALSO HELD THAT THE FACT THAT THE AGE NT RENDERS SERVICES ABROAD IN THE FORM OF PURSUING AND SOLICITING PARTICIPANTS AND THAT THE COMMISSION IS REMITTED TO HIM ABROAD ARE WHOLLY IRRELEVANT FOR THE PURPOSE OF DETERMINING SITUS OF HIS INCOME . WE DO NOT CONSIDER THIS APPROACH TO BE CORRECT. WHE N NO OPERATIONS OF THE BUSINESS OF COMMISSION AGENT IS CARRIED ON IN INDIA, THE EXPLANATION 1 TO SECTION 9(1)(I) TAKES THE ENTIRE COMMISSION INCOME FROM OUTSIDE THE AMBIT OF DEEMING FICTION UNDER SECTION 9(1)(I), AND, IN EFFECT, OUTSIDE THE AMBIT OF INCOME DEEMED TO ACCRUE OR ARISE IN INDIA FOR THE PURPOSE OF SECTION 5(2)(B). THE POINT OF TIME WHEN COMMISSION AGENT S RIGHT TO RECEIVE THE COMMISSION FRUCTIFIES IS IRRELEVANT TO DECIDE THE SCOPE OF EX PLANATION 1 TO SECTION 9(1)(I), WHICH IS WHAT IS MATERIAL IN THE CONTEXT OF THE SITUATION THAT WE ARE IN SEISIN OF. THE REVENUE S CASE BEFORE US HINGES ON THE APPLICABILITY OF SECTION 9(1)(I) AND, IT IS, THEREFORE. IMPORTANT TO ASCERTAIN AS TO WHAT EXTENT WOULD THE RIGOUR OF SECTION 9(1)(I) BE RELAXED BY EXPLANA TION 1 TO SECTION 9(1)(I). WHEN WE EXAMINE THINGS FROM THIS PERSPECTIVE, THE INEVITABLE CONCLUSION IS THAT SINCE NO PART OF THE OPERATIONS OF THE BUSINESS OF THE COMMISSION AGENT IS CARRIED OUT IN INDIA, NO PART OF THE INCOME OF THE COMMISSION AGENT CAN BE BROUGHT TO TAX IN INDIA. IN THIS VIEW OF THE MATTER, VIEWS EXPRESSED BY THE HON BLE AAR, WHICH DO NOT FETTER OUR INDEPENDENT OPINION ANYWAY IN VIEW OF ITS LIMITED BINDING FORCE UNDER S. 245S OF THE ACT, DO NOT IMPRESS US, AND WE DECLINE TO BE GUIDED BY TH E SAME. THE STAND OF THE REVENUE, HOWEVER, IS THAT THESE RULINGS , BEING FROM SUCH A HIGH QUASI - JUDICIAL FORUM , EVEN IF NOT BINDING, CANNOT SIMPLY BE BRUSHED ASIDE EITHER , AND THAT T HESE RULINGS AT LEAST HAVE PERSUASIVE VALUE. WE HAVE NO QUARREL WITH THIS PROPOSITION. WE HAVE, WITH UTMOST CARE AND DEEPEST RESPECT, PERUSED THE ABOVE RULINGS RENDERED BY THE HON BLE CO NO. 29/AHD/2016 I.T.A. NO.5/AHD/2016 ASSESSMENT YEAR: 2012 - 13 PAGE 6 OF 7 AUTHORITY FOR ADVANCE RULING. WITH GR E ATEST RESPECT, BUT WITHOUT SLIGHTEST HESITATION, WE HUMBLY COME TO THE CONCLUSION THAT WE ARE NOT PERSUADED BY THESE RULINGS. 7. IN VIEW OF THE ABOVE DISCUSSIONS, IN OUR CONSIDERED VIEW, LEARNED CIT(A) WAS INDEED JUSTIFIED IN HOLDING THAT GIVEN THE UNDISPUTED AND UNCONTROVERTED FACTS OF THIS CASE, THE NON - RESIDENT COMMISSION AGENTS WERE NOT TAXABLE IN INDIA I N RESPECT OF THEIR COMMISSION EARNINGS FROM ORDERS PROCURED ABROAD. 8. IT IS ALSO NOW WELL SETTLED IN LAW THAT WHEN THE PAYMENT MADE TO A NON - RESIDENT DOES NOT HAVE AN ELEMENT OF INCOME, TAX DEDUCTION SOURCE REQUIREMENTS UNDER SECTION 195(2) DO NOT COME INTO PLAY AT ALL. HON BLE SUPREME COURT , IN THE CASE OF G E INDIA TECHNOLOGY CENTRE PVT LTD VS CIT [(2010) 327 ITR 436 (SC)], HAS INTER ALIA OBSERVED AS FOLLOWS: IN OUR VIEW, SECTION 195(2) IS BASED ON THE PRINCIPLE OF PROPORTIONALITY . THE SAID SUB - SEC TION GETS ATTRACTED ONLY IN CASES WHERE THE PAYMENT MADE IS A COMPOSITE PAYMENT IN WHICH A CERTAIN PROPORTION OF PAYMENT HAS AN ELEMENT OF INCOME CHARGEABLE TO TAX IN INDIA. IT IS IN THIS CONTEXT THAT THE SUPREME COURT STATED, IF NO SUCH APPLICATION IS FILED, INCOME - TAX ON SUCH SUM IS TO BE DEDUCTED AND IT IS THE STATUTORY OBLIGATION OF THE PERSON RESPONSIBLE FOR PAYING SUCH SUM TO DEDUCT TAX THEREON BEFORE MAKING PAYMENT. HE HAS TO DISCHARGE THE OBLIGATION TO TDS . IF ONE READS THE OBSERVATION OF THE SUPREME COURT, THE WORDS SUCH SUM CLEARLY INDICATE THAT THE OBSERVATION REFERS TO A CASE OF COMPOSITE PAYMENT WHERE THE PAYER HAS A DOUBT REGARDING THE INCLUSION OF AN AMOUNT IN SUCH PAYMENT WHICH IS EXIGIBLE TO TAX IN INDIA. IN OUR VIEW, THE ABOVE OBSER VATIONS OF THIS COURT IN TRANSMISSION CORPORATION CASE (SUPRA) WHICH IS PUT IN ITALICS HAS BEEN COMPLETELY, WITH RESPECT, MISUNDERSTOOD BY THE KARNATAKA HIGH COURT TO MEAN THAT IT IS NOT OPEN FOR THE PAYER TO CONTEND THAT IF THE AMOUNT PAID BY HIM TO THE N ON - RESIDENT IS NOT AT ALL CHARGEABLE TO TAX IN INDIA , THEN NO TDS IS REQUIRED TO BE DEDUCTED FROM SUCH PAYMENT. THIS INTERPRETATION OF THE HIGH COURT COMPLETELY LOSES SIGHT OF THE PLAIN WORDS OF SECTION 195(1) WHICH IN CLEAR TERMS LAYS DOWN THAT TAX AT S OURCE IS DEDUCTIBLE ONLY FROM SUMS CHARGE ABLE UNDER THE PROVISIONS OF THE I.T. ACT , I.E., CHARGEABLE UNDER SECTIONS 4, 5 AND 9 OF THE I.T. ACT. (EMPHASIS BY UNDERLINING SUPPLIED BY US) CO NO. 29/AHD/2016 I.T.A. NO.5/AHD/2016 ASSESSMENT YEAR: 2012 - 13 PAGE 7 OF 7 9 . CLEARLY, THEREFORE, FOR APPLICATION OF SECTION 195, IT IS SINE QUA NON THAT THE PAYMENT TO NO - RESIDENT MUST HAVE AN ELEMENT OF INCOME LIABLE TO BE TAXED UNDER THE INDIAN INCOME TAX ACT, 1961. ON THE FACTS OF THIS CASE, AS WE HAVE ALREADY CONCLUDED, NO PART OF THE REMITTANCE TO THE COMMISSION AGENT WAS TAXABLE IN INDI A. THE ASSESSEE WAS, THEREFORE, NOT UNDER ANY OBLIGATION, ON THE FACTS OF THIS CASE, TO DEDUCT ANY TAX AT SOURCE FROM THE COMMISSION PAYMENTS TO THE NON - RESIDENTS. SINCE THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE, THE VERY FOUNDATION OF IMPUGNED DISAL LOWANCE UNDER SECTION 40(A)(I) CEASES TO HOLD GOOD IN LAW. LEARNED CIT(A) WAS, THEREFORE, QUITE JUSTIFIED IN DELETING THE IMPUGNED DISALLOWANCE. WE UPHOLD HIS ACTION, AND DISMISS THE GRIEVANCE RAISED BY THE ASSESSING OFFICER. 10. THE CROSS OBJECTION FILED BY THE ASSESSEE MERELY SUPPORTS THE CONCLUSIONS ARRIVED AT BY THE CIT(A). IT IS, THEREFORE, DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT, THE APPEAL AS ALSO THE CROSS OBJECTIONS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 29 TH DAY OF JULY, 20 16. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 29 TH DAY OF JU LY , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD