ACIT, New Delhi V. Ishman International, New Delhi

ITA 5880/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3940 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 17-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH ANAND
• Keywords: Residential status; Double taxation relief; Permanent establishment; TDS; Set aside
• Section: 142(1); 5(2); 40(a)(ia); 143(1); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 ACIT, CIRCLE-30(1), NEW DELHI. VS. ISHMAN INTERNATIONAL, W-71, GREATER KAILASH-II, NEW DELHI-110048. PAN-AAAFI7620L (APPELLANT) (RESPONDENT) APPELLANT BY SH. AMIT KATOCH, SR.DR RESPONDENT BY SH. SURESH ANAND, CA DATE OF HEARING 05.08.2019 DATE OF PRONOUNCEMENT 22 .08.2019 O R D E R PER SUCHITRA KAMBLE, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30.08.2016 PASSED BY THE CIT(A)-10, NEW DELHI IN RE LATION TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.97,41,665/- MA DE BY THE AO ON ACCOUNT OF EXPORT COMMISSION PAID TO FOREIGN PARTIE S U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 DUE TO NON-DEDUCTION OF TDS AS PER PROVISIONS OF SECTION 195. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. C1T(A) FAILED IN ESTABLISHING AS TO HOW THE CASES OF SKF B OILERS & DRIERS OF AAR AND RAJIV MALHOTRA, MENTIONED IN THE ASSESSMENT ORDER ARE NOT ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 2 APPLICABLE IN THE CASE OF ASSESSEE AS THE REASONS G IVEN FOR DOING SO WERE NOT FOUND TO BE COGENT AND CONVINCING. FURTHER , THE LD. CIT(A) HAS ALSO FAILED TO TAKE NOTE OF THE FACTUM OF WITHD RAWAL OF BOARDS CIRCULAR NO.7/2009. 3. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE , THE LD C1T(A) HAS ERRED IN RELYING UPON THE DECISIONS IN THE CASE OF AC1T, CIRCLE-29(1), NEW DELHI VS. NIDHI EXPORTS IN 1TA NO.626/DEL/2012 AND WELLSPRING UNIVERSAL VS JC1T (2015) WHERE THE FACTS OF THE CASE WERE FOUND TO BE DIFFERENT. 4. THE LD. C1T(A) HAS FAILED TO APPRECIATE THE IMPO RT OF SECTION 9 WHICH LAYS DOWN THAT ANY INCOME OF NON-RESIDENT SHA LL BE DEEMED TO ACCRUE ON ARISE IN INDIA WHOSE SOURCE OF INCOME IS IN INDIA AS IS IN THE INSTANT CASE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. IT IS PRAYED THAT THE ORDER OF THE LD. C1T(A)-10, NE W DELHI BEING CONTRARY TO THE FACTS ON RECORD AND THE SETTLED POS ITION OF LAW, BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 2. THE ASSESSEE FIRM WAS ENGAGED IN BUSINESS OF MAN UFACTURING AND EXPORT OF READYMADE GARMENTS. RETURN DECLARING TOTAL INCOME OF RS.9,91,97,680/- WAS E-FILED ON 03.10.2010 WHICH WA S PROCESSED U/S. 143(1) AND SUBSEQUENTLY, IT WAS SELECTED FOR SCRUTI NY. ACCORDINGLY, THE ASSESSING OFFICER ISSUED STATUTORY NOTICES U/S. 143 (2) AND 142(1) OF THE ACT WHICH WERE COMPLIED WITH BY THE ASSESSEE. T HE ASSESSING OFFICER OBSERVED THAT A SUM OF RS.98,32,149/- WAS D EBITED TO THE PROFIT & LOSS ACCOUNT UNDER THE HEAD COMMISSION ON EXPORT SALE BY THE ASSESSEE. THE ASSESSING OFFICER ASKED FOR THE DETAI LS IN RESPECT OF ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 3 INCURRENCE OF COMMISSION EXPENSES INDICATING PARTY- WISE DETAILS, PURPOSE, COMPLIANCE OF TDS ETC. IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEE SUBMITTED THAT DURING THE YEAR THERE WAS T OTAL EXPORT TURNOVER OF RS.116 CRORES IN SPITE OF RECESSION IN THE MARKET. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKIN G DISALLOWANCE AND COMPUTED THE INCOME AT RS.10,96,76,860/-. 3. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN DE LETING THE ADDITION OF RS.97,41,665/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF EXPORT COMMISSION PAID TO FOREIGN PARTIES U/S. 40(A )(IA) OF THE INCOME-TAX ACT, 1961 DUE TO NON DEDUCTION OF TDS AS PER PROVISIONS OF SECTION 195. THE LD. DR FURTHER SUBMITTED THAT THE CIT(A) FAILED IN ESTABLISHING AS TO HOW THE CASES OF SKF BOILERS AN D DRIERS PVT. LTD. OF AAR AND RAJEEV MALHOTRA , 284 ITR 564 MENTIONED IN THE ASSESSMENT ORDER ARE NOT APPLICABLE IN THE CASE OF THE ASSESSE E, AS THE REASONS GIVEN IN DOING SO WERE NOT FOUND TO BE CONVINCING. THE CIT(A) ALSO ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 4 FAILED TO TAKE NOTE OF THE FACTUM OF WITHDRAWAL OF BOARDS CIRCULAR NO. 07/2009. THE LD. DR FURTHER SUBMITTED THAT THE CIT( A) FAILED TO APPRECIATE THE IMPORT OF SECTION 9 WHICH LAYS DOWN THAT ANY INCOME OF NON-RESIDENT SHALL BE DEEMED TO ACCRUE AND AROSE IN INDIA WHOSE SOURCE OF INCOME IS IN INDIA AS IS IN THE INSTANT C ASE. 5. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) A ND FURTHER SUBMITTED THAT THE CIT(A) CATEGORICALLY MENTIONED T HAT THE FOREIGN AGENTS WERE RESIDENT OF INDIA AND THEY RENDERED SER VICES OUTSIDE INDIA. THE CIT(A) FURTHER OBSERVED THAT THE COMMISS ION WAS PAID ON THE BASIS OF ORDER SECURED THROUGH THEM AND THEY DI D NOT HAVE ANY PE IN INDIA AND HAVE NO BUSINESS CONNECTION IN ANY WAY IN INDIA, THEY WERE INDEPENDENTLY CARRYING ON THE BUSINESS OUTSIDE INDIA, COMMISSION RECEIVED FROM THE ASSESSEE FIRM WAS THEI R PROFIT WHICH WS TAXABLE AS PER DTAA WITH INDIA AND FRANCE AND UAE, NO PART OF THEIR INCOME ARISE IN INDIA. THE LD. AR FURTHER SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY RELIED ON THE CASE OF SKF BOILERS AND D RIERS PVT. LTD. AND IN THE CASE OF RAJEEV MALHOTRA. ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 5 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE MATERIAL AVAILABLE ON RECORD. THE CIT(A) HAS HELD AS FOLLOWS : 4.1 PERUSAL OF ASSESSMENT ORDER REVEALS THAT A.O. MADE THE DISALLOWANCE IN RESPECT OF COMMISSION PAID TO FOREI GN AGENTS ON WHICH TDS WAS NOT DEDUCTED BY THE APPELLANT. FOR MA KING DISALLOWANCE, A.O. RELIED UPON THE DECISIONS OF AAR IN THE CASE OF SKF BOILERS AND DRIERS P. LTD. AND RAJIV MALHOTRA A ND PROVISIONS OF SECTION 5 OF THE IT ACT HOLDING THAT COMMISSION PAID TO FOREIGN AGENTS IS DEEMED TO ACCRUE OR ARISE IN INDIA. RELIA NCE HAS ALSO BEEN PLACED BY THE AO ON THE BOARDS CIRCULAR NO. 7 /2009 BY WHICH THE EARLIER CIRCULARS I.E. CIRCULAR NO. 786 DATED 0 7.02.2000 AND CIRCULAR NO. 23 DATED 23.07.1969 WERE WITHDRAWN. THE REFORE, IT WAS HELD BY THE AO THAT ASSESSEE FAILED TO COMPLY W ITH THE PROVISIONS OF SECTION 195 OF THE ACT. ACCORDINGLY, COMMISSION PAYMENT OF RS.97,41,655/- WAS DISALLOWED AS PER PRO VISIONS OF SECTION 40(A)(I) OF THE ACT. 4.1.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND ARGUMENTS FORWARDED BY THE APPELLANT ON AOS INFERE NCE DRAWN IN THE ASSESSMENT ORDER. THERE IS NO DISPUTE THAT THERE IS NO PERMANENT ESTABLISHMENT OF THE AGENT IN INDIA AND A LSO THE COMMISSION WAS PAID OUTSIDE INDIA IN FOREIGN CURREN CY. THEREFORE, BEFORE GOING FURTHER, IT IS IMPORTANT TO UNDERSTAND THE PROVISION OF SECTION 5(2)(B) AND APPLICABILITY OF SECTION 9(1 )( I), IN THIS REGARD, THERE IS A RECENT DECISION OF THE HONBLE H-BENCH O F THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI IN THE CASE WELSPRING UNIVERSAL VS. JCIT (2015) IN ITA NO. 4761/DEL/2014 A.Y. 2011-12 HA S DEALT WITH THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S. 40(A)(I ) OF THE INCOME TAX ACT, 1961 IN RESPECT OF THE AMOUNT OF COMMISSION INCOME FOR RENDERING SERVICES IN PROCURING EXPORT ORDERS OUTSI DE INDIA WITHOUT DEDUCTION OF TAX AT SOURCE U/S. 195 OF THE ACT. IN THIS CASE, THE HONBLE BENCH HAS HELD THAT THE AMOUNT OF COMM ISSION ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 6 INCOME FOR RENDERING SERVICES IN PROCURING EXPORT O RDERS OUTSIDE INDIA IS NOT CHARGEABLE TO TAX IN THE HANDS OF THE NON-RESIDENT AGENT AND HENCE NO TAX IS DEDUCTIBLE U/S. 195 ON SU CH PAYMENT OF THE PAYER. RESULTANTLY, NO DISALLOWANCE IS CALLED F OR U/S. 40(A)(I) OF THE ACT. .. .. .. .. . . . .. . 4.1.5 THUS, SECTION 9(1)(I) PROVIDES THAT INCOME ARI SING OUT OF BUSINESS CONNECTION IS CHARGEABLE TO TAX IN INDIA ONLY TO THE EXTENT OF INCOME REASONABLY ATTRIBUTABLE TO THE OPE RATIONS CARRIED OUT IN INDIA. IT MAY BE NOTED THAT FOR INVOKING SEC TION 9(1)(I), EXISTENCE OF BUSINESS CONNECTION/PERMANENT ESTABLIS HMENT IS A SINE QUA NON AND INEVITABLE. IT ALSO APPEARS THAT I N THE AFORESAID RULING, THE EARLIER RULING OF THE HON'BLE AAR IN TH E CASE OF SPAHI PROJECTS, 315 ITR 374 HAS NOT BEEN CONSIDERED AND AL SO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. TOSHUKU, 125 ITR 525 HAS ALSO BEEN NOT CONSIDERED, AN D THEREFORE THE CASE OF SKF BOILERS AND DRIERS P. LTD. IS TO BE TREATED AS PER INCURIAM. THEREFORE, THE FINDING OF THE AO THAT RIGH T TO RECEIVE COMMISSION ARISES IN INDIA WHEN THE ORDER IS EXECUT ED BY THE PERSON RESIDENT IN INDIA IS NOT CORRECT SINCE THE M ERE FACT THAT PAYMENT IS MADE BY A PERSON RESIDENT IN INDIA OR TH E ORDER IS EXECUTED BY A PERSON RESIDENT IN INDIA DOES NOT RES ULT IN ESTABLISHMENT OF BUSINESS CONNECTION OF THE NON-RES IDENT PAYEE. IT IS FURTHER NOTICED THAT THE RULING OF THE HON'BLE A AR IN SKF BOILERS IS BASED ON THE RULING IN THE CASE OF RAJIV MALHOTR A, [(2006) 284 ITR 564 (AAR)]. ACCORDING TO THE LD. ASSESSING OFFIC ER, THE SAID DECISIONS LAY DOWN THAT TAX DEDUCTION WAS MANDATORY ON EXPORT COMMISSION SINCE COMMISSION WAS DEEMED TO ACCRUE OR ARISE IN INDIA. HOWEVER, IT IS OBSERVED THAT THE FACTS OF TH E ABOVE RULING ARE ENTIRELY DIFFERENT FROM THOSE OF THE APPELLANT. IN THE CASE OF RAJIV MALHOTRA, THE COMMISSION WAS PAYABLE TO NON-RESIDEN T AGENT FOR SOLICITING FOREIGN PARTICIPANTS ABROAD FOR A TRADE EXHIBITION TO BE HELD IN INDIA. THEREFORE IN VIEW OF SPECIFIC PROVISI ONS OF S. 5(2) (B) ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 7 R/W S. 9(1)(I) AS THE RIGHT TO RECEIVE THE COMMISSI ON UNDER THE TERMS OF THE AGENCY AGREEMENT HAD ARISEN IN INDIA, THE COMMISSION WAS HELD BE TAXABLE IN INDIA UNDER THE P ROVISIONS OF THE ACT. BUT IN THE APPELLANTS CASE, THE FACTS ARE ENTIRELY DIFFERENT. IN THIS CASE, THE APPELLANT HAS PAID FOREIGN COMMIS SION TO NON- RESIDENT FOR COMMISSION DUE ON EXPORT ORDERS PROCUR ED BY IT, I.E. THE NON-RESIDENT. THIS FOREIGN COMMISSION AGENT IS N OT RESIDENT IN INDIA. THIS AGENT OPERATES ITS ACTIVITIES OUTSIDE I NDIA IN ITS OWN COUNTRY AND NO PART OF ITS ACTIVITIES ARISES IN IND IA. IT WAS PAID COMMISSION WHICH RELATES TO SERVICES PROVIDED TO TH E APPELLANT FROM OUTSIDE INDIA THE RELATION BETWEEN APPELLANT AN D THE AGENT ARE PRINCIPAL TO PRINCIPAL. THIS AGENT DID NOT HAVE PERMANENT ESTABLISHMENT OR PERMANENT PLACE OF BUSINESS PLACE IN INDIA. THE COMMISSION WAS REMITTED DIRECTLY TO THIS AGENT DIRE CTLY OUTSIDE INDIA AND NOT RECEIVED BY IT OR ON IT BEHALF IN IND IA BY ANY THIRD PARTY (OR BY IT). MOREOVER, THE HON'BLE AAR IN THE CASE OF IND TELESOFT P. LTD. 267 ITR 725 HAVE HELD THAT TAX WAS N OT REQUIRED TO BE DEDUCTED OUT OF FOREIGN AGENTS COMMISSION. IN T HAT VIEW OF THE MATTER, THE DECISION OF THE AAR IN SKF BOILERS CANN OT BE SAID TO BE A BINDING PRECEDENT. .. . .. . .. . 4.1.7 IN THE PRESENT CASE, THERE IS NO BUSINESS CON NECTION AT ALL OF THE AGENT IN INDIA - REAL OR INTIMATE FROM WHICH IN COME HAS ARISEN DIRECTLY OR INDIRECTLY. THUS, IN THE LIGHT OF RATIO OF ABOVE JUDGMENTS, THE ACTIVITY OF FOREIGN AGENT RENDERING SERVICES TO EXPORTER IN INDIA CAN BE BEST DESCRIBED AS INCOME A CCRUING FROM BUSINESS CONNECTION U/S. 9(1 )(I), THUS CARRYING ON SOME ACTIVITY IN INDIA IS MUST FOR MAKING THEIR FOREIGN COMMISSION T AXABLE IN INDIA AS ALSO HELD BY THE HONBLE SUPREME COURT IN THE CA SE CIT VS. TOSHOKU. THUS, IN THE ABSENCE OF ANY SERVICES RENDERE D IN INDIA, FOREIGN COMMISSION PAID TO NON-RESIDENT FOR SERVICE S RENDERED OUTSIDE INDIA IS NOT TAXABLE IN INDIA AND HENCE, NO LIABILITY TO DEDUCT TDS U/S. 195. ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 8 4.1.8 REGARDING THE APPLICABILITY OF PROVISION OF S ECTION 195 OF THE ACT, AGAIN THE HONBLE COURT HAS REFERRED THE DECIS ION OF HONBLE SUPREME COURT AS UNDER : 17. AFTER REFERRING TO ELI LILLY & CO. INDIA (P.) LTD. (SUPRA) IN GE INDIA TECHNOLOGY CENTRE (P) LTD. (SUPRA), IT HAS BEEN HELD: 17. SECTION 195 APPEARS IN CHAPTER XVII WHICH DEAL S WITH COLLECTION AND RECOVERY. AS HELD IN CIT VS. ELI LILL Y & CO. (P.) LTD. THE PROVISIONS FOR DEDUCTION OF TAS WHICH IS I N CHAPTER XVII DEALING WITH COLLECTION OF TAXES AND THE CHARG ING PROVISIONS OF THE IT ACT FROM ONE SINGLE INTEGRAL, I NSEPARABLE CODE AND, THEREFORE, THE PROVISIONS RELATING TO TDS APPLIES ONLY TO THOSE SUMS WHICH ARE INSEPARABLE CODE AND, THEREFORE, THE PROVISIONS RELATING TO TDS APPLIES O NLY TO THOSE SUMS WHICH ARE CHARGEABLE TO TAX UNDER THE IT ACT. IT IS TRUE THAT THE JUDGMENT OF ELI LILLY WAS CONFINED TO SECTION 192 OF THE IT ACT. HOWEVER, THERE IS SOME SIMILARIT Y BETWEEN THE TWO. IF ONE LOOKS AT SECTION 192 ONE FINDS THAT IT IMPOSES STATUTORY OBLIGATION ON THE PAYER TO DEDUCT TAS WHE N HE PAYS ANY INCOME CHARGEABLE UNDER THE HEAD SALARIE S. SIMILARLY, SECTION 195 IMPOSES A STATUTORY OBLIGATI ON ON ANY PERSON RESPONSIBLE FOR PAYING TO A NON-RESIDENT ANY SUM CHARGEABLE UNDER THE PROVISIONS OF THE ACT, WHICH EXPRESSION, AS STATED ABOVE, DOES NOT FIND PLACE IN OTHER SECTIONS OF CHAPTER XVII. IT IS IN THIS SENSE THAT WE HOLD THAT THE IT ACT CONSTITUTES ONE SINGLE INTEGRAL INSEPARAB LE CODE. HENCE, THE PROVISIONS RELATING TO TDS APPLIES ONLY T O THOSE SUMS WHICH ARE CHARGEABLE TO TAX UNDER THE IT ACT. 4.1.9 APART FROM THE ABOVE, I ALSO PLACE RELIANCE O N THE DECISION OF HONBLE DELHI ITAT, DELHI BENCH-E, NEW DELHI IN THE CASE ACIT ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 9 CIRCLE 29(1), NEW DELHI VS. M/S NIDHI EXPORTS IN IT A NO. 626/DEL/2012 FOR THE ASSTT. YEAR 2008-09 WHEREIN TH E DELETION OF ADDITION MADE BY THE AO ON ACCOUNT OF COMMISSION PA YMENT WITHOUT DEDUCTING TDS U/S 40(A)(I) OF THE IT ACT WAS CHALLENGED BY THE DEPARTMENT AGAINST THE ORDER OF THE ID. CIT(A ). HOWEVER THE HONBLE ITAT UPHELD THE ORDER PASSED BY THE ID. CIT(A) HOLDING THAT THE BASIS AND REASONING GIVEN BY THE CIT(A) IN DELETING THE IMPUGNED ADDITION MADE BY THE AO ARE SOUND AND CONV INCING IN THE LIGHT OF THE CASE LAW RELIED UPON. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR AND IDENTICAL TO TH E ABOVE CASE, HENCE THE SAME ARE FOUND TO BE SQUARELY APPLICABLE IN THE APPELLANTS CASE. THEREFORE, KEEPING IN VIEW THE ENTIRETY OF THE FACTS AND THE CIRCUMSTANCES, JUDICIAL PRONOUNCEMENT RELIED UPON B Y THE LD. AR, REFERRED TO ABOVE, I FIND CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE APPELLANT THAT THE PAYMENT OF COMMISSION ARE M ADE TO NON- RESIDENT OVERSEAS AGENTS WHO HAVE NO PE OR BUSINES S ACTIVITIES IN INDIA AND THE SERVICES ARE ALSO RENDERED OUTSIDE IN DIA AS SUCH NO INCOME IS ARISING TO THE NON-RESIDENT COMMISSION AG ENT IN INDIA AND AS SUCH NO TDS IS DEDUCTIBLE U/S 194-H WHICH IS APPLICABLE FOR RESIDENT INDIANS ONLY. ON THE BASIS OF ABOVE DISCUS SION, I AM OF THE CONSIDERED VIEW THAT COMMISSION PAYMENT TO THE NON- RESIDENT DOES NOT REPRESENT INCOME WHICH IS CHARGEABLE TO TA X U/S. 195 OF IT ACT, 1961 WHEN EXAMINED AND ANALYSED UNDER THE FR AMEWORK OF PROVISIONS OF INCOME TAX ACT, 1961. IT IS THEREFORE HELD THAT TDS WAS NOT REQUIRED FOR COMMISSION PAYMENT WHICH WAS P AID TO NON- RESIDENTS. AS SUCH THE MISCHIEF OF SECTION 40(A)(I) FOR THE DISALLOWANCE IS NOT WARRANTED. CONSEQUENTLY, NO DIS ALLOWANCE U/S. 40(A)(I) OF THE ACT COULD BE MADE AS THERE IS NO VI OLATION OF TDS PROVISIONS. THE DISALLOWANCE OF RS.97,41,655/- MADE BY THE AO IS, THEREFORE, HELD TO BE NOT JUSTIFIED. THE SAME IS DIR ECTED TO BE DELETED. THUS, APPELLANT GETS RELIEF IN RESPECT OF T HIS GROUND OF APPEAL RAISED BY HIM. ITA NO.5880/DEL/2016 ASSESSMENT YEAR : 2010-11 PAGE | 10 THUS, THE CIT(A) RIGHTLY OBSERVED THAT THE PAYMENT OF COMMISSION ARE MADE TO NON-RESIDENT OVERSEAS AGENTS WHO HAVE NO PE OR BUSINESS ACTIVITIES IN INDIA AND THE SERVICES ARE ALSO RENDE RED OUTSIDE INDIA AS SUCH NO INCOME IS ARISING TO THE NON-RESIDENT COMMI SSION AGENT IN INDIA AND AS SUCH NO TDS IS DEDUCTIBLE U/S 194-H WH ICH IS APPLICABLE FOR RESIDENT INDIANS ONLY. THUS, THERE IS NO NEED T O INTERFERE WITH THE FINDINGS OF THE CIT(A). THE APPEAL OF THE REVENUE I S DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF AUGUST, 2019. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 .08.2019 * AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI