Madhumita Roy ORDER
PER BENCH:
1. The bunch of appeals filed by the Revenue are directed against the orders all dated 19.01.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi, arising out of the orders dated 02.12.2016 (in A.Y. 2012-13) & 01.12.2016 (in A.Ys. 2013-14 & 2014-15) passed by the DCIT, Circle 2(1)(2), Ahmedabad under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to 'the Act') for Assessment Years 2012-13, 2013-14 & 2014-15, whereby and whereunder addition in respect of foreign commission paid to foreign agents without deducting TDS under Section 40(a)(i) of the Act has been deleted.
2. As all the appeals relate to identical set of facts and of the same assessee, these are heard analogously and are being disposed of by a common order for the sake of convenience.
ITA No. 164/Ahd/2023 - A.Y. 2012-13
3. The assessee is engaged in the business of Export Trading of Cotton Yarn. It filed its return of income for the year under consideration on 22.08.2012 declaring total income of Rs. 2,36,08,360/-, which was processed under Section 143(1) of the Act. Upon selection of the case for scrutiny requisite notices were served upon the assessee alongwith questionnaire. Thereafter, the case was referred to the Ministry of Finance, Foreign Tax & Tax Research Division by the PCIT, Ahmedabad dated 09.11.2016 sending therewith the requisite information received from New-Zealand Revenue Authority. Upon perusal of the accounts of the assessee, it was found that assessee paid commission amounting to Rs. 5,19,57,682/- to non-resident foreign agent without deducting the tax at source, a show cause dated 02.12.2016, therefore, was issued and served upon the assessee as to why foreign commission should not be disallowed and added to the income of the assessee invoking the provision of Section 195 of the Act. The assessee explained the same. The commission amounts which were earned by the non- resident for services rendered outside India could not be deemed to be income which was either accrued or arisen in India. The case of the assessee is this that since the said agent not carrying out any business operation in India, the commissions paid to them is not liable to be taxed in India. Such plea of the assessee was not found to be acceptable and the Ld. AO was of the opinion that the assessee is under obligation to deduct tax at source as envisaged under Section 195 of the Act from the payments made to the non-resident agents towards the services rendered by them. In that view of the matter, the expenditure claimed under the head 'commission expenses' paid to non- resident has been disallowed under Section 40(a)(ia) of the Act and added to the total income of the assessee. The entire amount of Rs. 5,19,57,682/- on which TDS was not deducted was disallowed and added in the hands of the assessee, which was, in turn, deleted by the Ld. CIT(A) on the basis of the judgment passed by the Hon'ble Supreme Court in case of CIT vs. Toshoku Ltd., reported in MANU/SC/0268/1980 : 125 ITR 525.
4. At the time of hearing of the instant appeal, Ld. DR relied upon the order of the Ld. AO and the Ld. AR relied and supported the order passed by the Ld. CIT(A) in view of the judgment passed by the Hon'ble Supreme Court in the case of CIT vs. Toshoku Ltd. (supra), a copy whereof has also handed over to us along with the copy of the order passed by the Co-ordinate Bench in assessee's own case in ITA Nos. 719/Ahd/2014 & 3412/Ahd/2016 for A.Ys. 2010-11 & 2011-12, wherein relief granted by the Revenue in favour of the assessee was upheld.
5. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. We have further considered the judgment passed by the Hon'ble Supreme Court in the case of CIT vs. Toshoku Ltd. (supra) and order passed by the Co-ordinate Bench in assessee's own case. It appears that on identical issue Hon'ble Supreme Court has been pleased to hold that the commission agent who does not carry out any business operation in India and acts as a selling agent outside India is not chargeable to tax in India and that the receipt in India of the sale proceeds remitted by the purchasers from abroad did not amount to an operation carried out by the non-resident commission agent in India as contemplated by clause (a) of the Explanation to Section 9(1)(i) of the Act. The Hon'ble Supreme Court has categorically held that the commission amounts which were earned by the non-resident for services rendered outside India could not be deemed to be income which had either accrued or arisen in India. Considering the entire aspect of the matter and respectfully relying upon the ratio laid down by the Hon'ble Supreme court and the Co-ordinate Bench, we do not find any reason to deviate from the stand taken by the Co- ordinate Bench which was passed in favour of the assessee by confirming the order passed by the Revenue in assessee's own case for A.Ys. 2010-11 & 2011-12. The impugned order passed by the Revenue is, therefore, found to be just and proper so as to warrant interference. The same is, thus, upheld. Revenue's appeal is, thus, found to be devoid of any merit and, therefore, dismissed.
6. In the result, Revenue's appeal is dismissed.
7. The decision in ITA No. 164/Ahd/2023 for A.Y. 2012-13 shall also apply mutatis mutandis in ITA Nos. 165 & 166/Ahd/2023 for A.Ys. 2013-14 & 2014-15.
8. In the combined result, all three appeals filed by the Revenue are dismissed.
This Order pronounced 12/07/2023.
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