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(Conducted Through Virtual Court) Before: Ms. Annapurna Gupta, Accountant Member

And Ms. Suchitra Kamble, Judicial Member

The Assistant

Commissioner of Income Tax, Circle-2(1)(1), Ahmedabad

(Appellant)

Vs

M/s. Gujarat Ambuja Exports Ltd. Opp.

Memnagar Fire Station, Navjivan, Navrangpura, Ahmedabad

PAN No: AAACG3980A

(Respondent)

Appellant by : Shri Dinesh Singh, Sr. D.R.

Respondent by : Shri Tushar Hemani, Sr. Adv.

& Shri Parimalsinh B. Parmar, Adv.

Date of hearing : 17-02-2022 Date of pronouncement : 25-02-2022

आदेश /ORDER

PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:-

The present appeal has been filed by the Revenue against the order passed by the Commissioner of Income Tax (Appeals)-2, Ahmedabad, (in short referred to as CIT(A)), dated 28-04-2017, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the “Act”) pertaining to Assessment Year (A.Y) 2014-15.

2. At the outset itself, it was pointed out by the Ld. Counsel for the assessee that the Ld. CIT(A) had granted relief to the assessee following the order of the Ld.

CIT(A) in the case of the assessee for assessment years 2012-13 & 2013-14 which ITA No. 1550/Ahd/2017

Assessment Year 2014-15

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order he pointed out stood confirmed by the ITAT in its order in ITA No.

3233/Ahd/2015 and ITA No. 2037/Ahd/2016 dated 23.08.2019 for assessment year 2012-13 and 2013-14 respectively. Copy of the said order was placed before us.

Having noted the same, we shall now proceed to adjudicate the issues raised by the Revenue before us. Ground No. 1 reads as under:

1. The Ld. CIT(A) has erred in law and on facts in restricting the disallowance 80IC to Rs.

49,110/- without properly appreciating the facts of the case and the material brought on record.

3. As emanates from the order of the authorities below, the grievance of the revenue in this ground relates to the allowance of claim of deduction u/s. 80IC by the Ld.

CIT(A) on incomes pertaining to Interest on Electricity Deposit, Recovery from Transporters and Sundry Balances of Vendors written off, which had been denied by the Assessing Officer (A.O.) holding that they were not in the nature of incomes derived from the business of the assessee for the purposes of being eligible to claim deduction of profits thereon. The quantum in relation to the said incomes is as under:

(a) Interest on Electricity Deposit Rs. 16,18,184/- (b) Recovery from Transporters Rs. 11,37,585/- (c) Sundry Balances of Vendors written off Rs. 22,28,062/-

4. As pointed out at the outset itself by the Ld. Counsel for the assessee, the Ld.CIT(A) had allowed the assessee’s claim of deduction of these incomes following the CIT(A)’s order for Assessment Year 2012-13 & 2013-14. The relevant findings of the Ld. CIT(A) at Para 2.3 to 2.7 is as under:

2.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The AO has disallowed the claim of deduction u/s. 80IC of I. T. Act, 1961 in respect of the following income derived by the appellant in the year under consideration:-

Particulars Amount

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Interest on NSC 15,956/- Interest on Electricity Deposit 16,18,184/- Interest on Staff Loan 1 ,47,745/-

Penalties and Fines Recovered from Transporters

1 1 ,37,585/-

Sundry Balances of Vendors written back

22,28,062/-

TOTAL : 51,47,532/-

2.4. It is here to be mentioned that the AO has not granted the deduction on the aforesaid amounts by saying that none of the above income can be held to be generated from the manufacturing activities of the undertaking, and therefore, the nature of above incomes cannot be held as income derived from manufacturing activities. Thus, he held the same as non - eligible incomes for deduction under the provisions of section 80IC of the l.T. Act, 1961.

2.5. It is seen from the facts of the case, that identical issue has been decided by this office in appellant's own case for A. Y. 2013-14 vide Appellate Order in Appeal No.CIT(A)- 2/316/DC. Cir. 2(1)(1)/2015-16 dated 20/05/2016. The relevant findings given in the order are reproduced hereunder:-

"2.3. 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 claim of deduction u/s. 80IC of I.

T. Act, 1961 in respect of the following income derived by the appellant in the year under consideration:-

(i) Interest on NSC Rs. 16,326/- (ii) Interest on electricity deposit Rs.7,06,997/-

(iii) Interest on staff loan Rs. 79,614/- (iv) Recovery from transporters Rs. 30,576/- (v) Sundry balances of vendors written off Rs. 3,36,911/- (vi) Interest on fixed deposits Rs. 3,834/-

Total Rs. 11,74,258/-

2.4. It is here to be mentioned that the AO has not granted the deduction on the aforesaid amounts by saying that none of the above income can be held to be generated from the manufacturing activities of the undertaking, and therefore, the nature of above incomes cannot be held as income derived from manufacturing activities. Thus, he held

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the same as non - eligible incomes for deduction under the provisions of section 80IC of the I. T. Act, 1961.

2.5. On the other side, the appellant submitted that all the aforesaid incomes have been derived directly or indirectly from the business of manufacturing as stipulated under the provisions of section 80IC of the I. T. Act, 1961. The appellant further claimed that as per the various decisions and judgements the income pertaining to the interest on electricity deposit, recovery from transporters and sundry balances of suppliers return back was held to be the income derived indirectly from the business / manufacturing activities of the appellant, and therefore, the same is eligible for the deduction u/s. 80IC of the I. T.

Act, 1961.

2.6. It is seen from the facts of the case, that identical issue has been decided by this office in appellant's own case for A. Y. 2012- 13 vide Appellate Order in Appeal No.CIT(A)-2/506/DC. Cir. 2(1)(1)/2014-15 dated 20/08/2015. The relevant findings given in the order are reproduced hereunder:-

2.3. 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 claim of deduction u/s. 80IC of I.

T. Act, 1961 in respect of the following income derived by the appellant in the year under consideration:-

(i) Interest on NSC Rs. 13,586/-

(ii) Interest on electricity deposit Rs.5,50, 1 40/-

(iii) Interest on staff loan Rs. 45,842/-

(iv) Recovery from transporters Rs. 32,285/-

(v) Sundry balances of vendors written off Rs.12.91.362/- Total Rs. 19,33,215/-

2.4. It is here to be mentioned that the AO has not granted the deduction on the aforesaid amounts by saying that none of the above income can be held to be generated from the manufacturing activities of the undertaking, and therefore, the nature of above incomes cannot be held as income derived from manufacturing activities. Thus, he held the same as non - eligible incomes for deduction under the provisions of section 80IC of the I. T. Act, 1961.

2.5. On the other side, the appellant submitted that all the aforesaid incomes have been derived directly or indirectly from the business of manufacturing as stipulated under the provisions of section 80IC of the I. T. Act, 1961. The appellant further claimed that as per the various decisions and judgments the income pertaining to the interest on electricity deposit, recovery from transporters and sundry balances of suppliers return back was held to be the income derived indirectly from the business / manufacturing activities of the appellant, and therefore, the same is eligible for the deduction u/s. 80ICof the I. T.

Act, 1961.

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2.6. Considering the facts and submission, it is found that the appellant had derived the interest income on NSC and interest on staff which cannot be said to be even indirect income from the business activities eligible for deduction u/s. 80IC of the I. T. Act, 1961.

Making the investment in NSC and deriving the interest thereupon cannot be said to for the purpose of the business for want of necessary details and documents establishing the requirement of investment in the NSCs. There was no reason to make the investment in the NSC for the purpose of the eligible business and thus the interest derived there-from cannot form part of the eligible profits for deduction. Further, with regard to interest on staff loan also, which was one kind of income on the funds lent to the staff members.

Thus, this income is neither directly or indirectly linked with the business activities of the appellant. Even the appellant has not provided any details and documents in support stating that the loans were given to the employees who were engaged in the eligible business for which income was deductible u/s. 80IC of the I. T. Act. Thus, In view of the aforesaid discussion, the AOs action for not granting the deduction on the interest on NSC and Interest on staff loan is confirmed and no deduction u/s. 80IC fs granted upon the same.

2.7. Further, with regard to the claim of deduction on interest on electricity deposits, it was found that it was mandatory on the part of the appellant to make the deposits as per the rules of the Electricity Board and without making such deposit, the electric connection was not available and in absence of the same, the production was also impossible. Thus, this interest derived from such electricity deposit was indirectly connected with the eligible business profits, and therefore, the deduction u/s. 80IC is required to be granted relying upon the decisions / judgments of various Hon'ble Courts as under:-

> CIT vs. Seshasavee Papers & Board Ltd. H994) 207 ITR 0080 (Mad-HC):

Conclusion: Interest earned by assessee a priority industry from deposits made with Electricity Board in order to ensure power supply, is attributable to priority industry, hence eligible for deduction under s. 80-1".

> CIT vs. Seshasavee Papers & Board Ltd. (2000) 243 ITR 0421 (Mad-HC):

Conclusion: Assessee was entitled to deduction under s. 80-1, in respect of the interest received on the deposits made by the assessee with the Electricity Board for the supply of electricity."

> Pondicherrv Distilleries Ltd vs. Income Tax Officer ( 1984) 8 ITD 0039 (Chen-Trib):

Held:

(i) The facts of the case support the contention of the assessee that it had to build up finance to meet the projects and expansion scheme likely to take place in future and it is towards this purpose that the profits are kept back without distribution and the amount available in respect of the same and also the reserves were invested temporarily in fixed deposits. Nonetheless the amounts held by it in fixed deposits constituted part of its capital employed in its undertaking of manufacture of liquor and, therefore, it follows that any income or profits generated by such funds employed in the undertaking of the

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assessee partake the character of profits and gains derived from such undertaking. (Para 3 & 4)

(ii) Thus even if the interest income derived by the assessee cannot be strictly referable to the business activity of manufacture of liquor and has not direct nexus thereto, it can still be regarded as profit or gain derived from the undertaking as a whole. It does not make any difference as to whether any such item of income is assessed under the head 'business' or under the head 'other sources'. Further every income, profit or gain to be derived from the undertaking need not necessary be directly relatable to the operation of manufacture and sale of the particular commodity or articles dealt in by the assessee.

The assessee is therefore, entitled to claim deduction under s. 80HH on the amount of interest earned by it on the fixed deposits."

2.8. Further, with regard to the recoveries from transporters, it is found that it was the recovery on account of loss of material in transit i.e. in the nature of recovery of goods.

Thus, it is a direct income relating to the eligible business of the appellant for the reason that the shortage derived on account of loss of material was the trading loss /business loss and the recoveries made from the transporters against such loss is the reimbursement towards such losses. Thus, the recoveries being in the nature of business income are eligible for deduction u/s. 80IC of the I. T. Act.

2.9. Further, with regard to sundry balances written off in respect of the Kasar / Discount received from supplier / supplier parties is also having a direct connection with the purchases made by the appellant and to this extent the purchases would be reduced and accordingly the eligible profits would consequently be increased. Thus, it has the direct nexus with the eligible profits. In this regard, reliance is placed on the decision of Hon'ble Bangalore ITAT in the case of Wipro Information Technology Ltd. Vs. DCIT [2004] [88 TTJ 0778] which reads as under:-

> Wipro Information Technology Ltd vs. Dv. CIT f2004) 88 TTJ 0778 (Bang-Trib):

"34.4. We find from the facts of the case that total details in respect of miscellaneous income were furnished before the AO as well as the CITfAj. The CIT(A) himself has noted this in his order, as reproduced earlier. There is no material with us to suggest that the assessee has no objection in treating these items as not forming part of profit derived from the industrial undertaking. On the contrary, the assessee has raised a specific ground and furnished before the CIT(A) as per its letter, dt. 6th Jan., 1998. We have, therefore, no hesitation in holding that the miscellaneous income which is in the nature of trading receipt like discount received from suppliers for early payment and the amount written back in respect of sundry credit balances would form part of the profit derived from the industrial undertaking eligible for deduction under ss. 80HH and 80-1 of the Act. The AO is directed to include the sum of Rs. 11,41,949 being the miscellaneous income while computing the profit derived from industrial undertaking for the purpose of deduction under ss. 80HH and 80-1 of the Act."

2.10. In view of the aforesaid discussion, considering the submission and decision of authorities the appellant is eligible to get the deduction on the income derived from

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interest on electricity deposit, recoveries from transporters and sundry balances of vendors written back as the same are having nexus with the eligible business, and therefore, deduction u/s. 80IC is granted thereupon.

2.11. In result, the ground of appellant is partly allowed."

2.7. On going through the above, it has been noticed that the deduction of the income on account of Interest on NSC and interest

on staff loan amounting to Rs. 16,3267- and Rs.79,614/- respectively is not allowed for the reasons discussed in the aforesaid appellate order as the same cannot be said to be direct or indirect income from the business activities being derived out of manufacturing activities. Thus, the aforesaid two incomes are not eligible for deduction u/s. 80IC of the I. T. Act, 1961 and the disallowance of the deduction upon the same by the AO is confirmed. With regard to the inferest on fixed deposit amounting to Rs.3,834/-, the same is also not found derived from the manufacturing activities and hence the appellant is not entitled for the deduction u/s. 80IC of the I. T. Act, 1961. Thus, the disallowance of deduction by the AO is confirmed.

2.8. With regard to the other incomes such as interest on electricity deposit, penalties and fines recovered from transporters and sundry balances of vendors written back, the appellant is eligible for deduction u/s. 80IC of the I. T. Act, following the decision of the CIT(A) in the immediately preceding year and accordingly, the disallowance made by the AO on these incomes is deleted.

The ground of appeal for this year is accordingly partly allowed."

2.6. On going through the above, it has been noticed that the deduction of the income on account of interest on NSC and interest on staff loan amounting to Rs. 15,9567- and Rs. 1,47,7457- respectively is not allowed for the reasons discussed in the aforesaid appellate order as the same cannot be said to be direct or indirect income from the business activities being derived out of manufacturing activities. Thus, the aforesaid two incomes are not eligible for deduction u/s. 80IC of the I. T. Act, 1961 and the disallowance of the deduction upon the same by the AO is confirmed. The disallowance

@ 30% of the aforesaid income is confirmed.

2.7. With regard to the other incomes such as interest on electricity deposit, penalties and fines recovered from transporters and sundry balances of vendors written back, the appellant is eligible for deduction u/s. 80IC of the I. T. Act, following the decision of the CIT(A) in the immediately preceding year i.e. A. Y. 2013-14 & A. Y. 2012-13 and accordingly, the disallowance of the deduction made by the AO on these incomes is deleted.

5. We have perused the order of the ITAT in the case of the assessee for Assessment

Year 2012-13 & 2013-14 wherein we have noted that the findings of the Ld. CIT(A)

were upheld. The relevant portion of the ITAT at para 21 to 22 of the order is as

under:

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21. The ld.counsel for the assessee at the very outset submitted that as far as amounts mentioned under the head interest on NSC and interest on staff loan is concerned they are not in dispute. The deduction claimed under section 80IC with regard to both these items have not been granted by the ld.CIT(A), and the assessee is not challenging the finding of the ld.CIT(A). The Revenue is challenging the grant of deduction with regard to income earned on interest on electricity deposits, recovery from transporters and sundry balance of vendors written off. He submitted that issue in dispute is squarely covered by the decision of Hon’ble Supreme Court in the case of CIT Vs. Meghalaya Steel Ltd., 383 ITR 217 (SC). He further relied upon the judgment of Hon’ble Madras High Court in the case of CIT Vs. Seshasayee Papers & Board Ltd., 243 ITR 0421 (Mad) which has been considered by the ld.CIT(A) in the finding extracted (supra). On the strength of these decisions, he submitted that the ld.CIT(A) has rightly granted deduction to the assessee. On the other hand, the stand of the Revenue is that the income under these heads was not earned by the assessee directly from the manufacturing process, and therefore, they deserves to be excluded.

22. We have duly considered rival submissions and gone through the record carefully. There is no dispute with regard to the proposition that deduction under section 80IC is admissible where the gross total income of an assessee includes any profit and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2) of section 80IC of the Act; sub-section (2) further contemplates that this section applies to an undertaking or enterprise which has begun or begins to manufacture or produce any article or things. There is no dispute that the assessee has begun to manufacture any article or thing. The question whether the alleged income sub-divided by the AO has nexus with the manufacturing activity or not. As far as interest income on fixed deposits made with electricity department is concerned, it has direct nexus with the manufacturing activity. Unless an electricity connection is there, no manufacturing activity would commence and for taking electricity connection, it is mandatory to give deposits. Similarly, the assessee had made recoveries from transporters on account of loss of material on transit. Therefore, it has a direct nexus with the manufacturing process. The goods manufactured or raw-materials purchased by it were lost in transit, which were compensated by the transporter. It has a direct nexus. Similarly, if the assessee get certain discount from the supplier, then it would reduce the purchase price of the material, which will enhance the profit, and therefore, deduction on such higher profit will be admissible. The ld.CIT(A) has rightly appreciated this aspect and granted the deduction to the assessee. We do not find any error in the order of the ld.CIT(A), and therefore, this ground of appeal is rejected in both the years.

6. On going through the above, it is abundantly clear that the basis on which the Ld.

CIT(A) had allowed the assessee’s claim of deduction u/s. 80IC in relation to income

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being Interest on Electricity Deposit, Recovery from Transporters and Sundry Balances of Vendors written off, being the order of the Ld. CIT(A) for Assessment Year 2012-13 & 2013-14,the same has been upheld by the ITAT. We have noted that the ITAT with respect to the very same nature of incomes as in the impugned order had held that such incomes has affirmed the findings of the Ld.CIT(A) that they are derived from the manufacturing activity and therefore were eligible to claim deduction of profits earned thereon u/s. 80IC of the Act.

7. The Ld. D.R. was unable to point out any distinguishing fact before us nor was any decision of the higher authorities brought to our notice holding to the contrary.

8. In view of the above, we find no reason to interfere in the order of the Ld. CIT(A) allowing assessee’s claim of deduction u/s. 80IC of the Act on Electricity Deposit, Recovery from Transporters and Sundry Balances of Vendors written off .

Ground no. 1 raised by the Revenue is accordingly dismissed.

9. Ground No. 2 reads as under:

“The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of foreign commission paid to non-residents amounting to Rs. 4,55,58,659/- without properly appreciating the facts of the case and the material brought on record. “

10. As emanates from the order of the authorities below, the disallowance of foreign commission to the tune of Rs. 4,55,58,659/- was made on account of non-deduction of tax at source thereon.

11. The Ld. CIT(A), we have noted, followed the order of the First Appellate

Authority in Assessment Year 2012-13 & 2013-14 deleting the impugned

disallowances. The relevant findings of the Ld. CIT(A) at para 4.3 of the order where

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in he has noted that the issue was identical to that in Assessment Year 2012-13 &

2013-14 in assessee’s own case and further noting that most of the commission agents were identical to that in Assessment Year 2013-14 while in rest of the cases evidences had been filed by the assessee to show that the income did not accrue or arise in India nor any payment was made to them in India, accordingly, he deleted the disallowance made by the A.O. The relevant findings of the Ld. CIT(A) at para 4.3 4.5 & 4.6 is as under:

4.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The A.O. has disallowed the commission paid to foreign agents amounting to Rs. 4,55,58, 659/- by holding that the income arising on account of commission payable to overseas agents was deemed to accrue or arise in India and was accordingly taxable under the Provisions of section 5(2)(b) read with section 9(1)(i) of Income Tax Act.

4.4 It is seen from the facts of the case, that identical issue has been decided by this office in appellant’s own case for A.Y. 2013-14 vide Appellate Order in Appeal No. CIT(A)- 2/316/DC. Cir. 2(1)(1)/2015-16 dated 20.05.2016. The relevant findings given in the order are reproduced hereunder:-

………

4.5. In view of the above facts of the case, written submission filed by the appellant and the fact that identical issue has been decided by this officer in favour of appellant in appellant’s own case for immediately preceding years i.e. A.Y. 2013-14 & 2012-13.

4.6. It has been noticed that although there were new commission agents in the year under consideration but in respect of such agents also the appellant has provided necessary details and documents to the A.O. and in the present appellate proceedings such as copies of email communications, ledger account, certificate of no PE in India, copies of agreements and contract with exporters having name of agent, copies of invoices and debit notes raised by the commission agents, copies of Form No.15CA &

15CB and bank payments swift copies etc. These evidences amply established the payment made outside the India and non existence of any business connection or permanent establishment in India of such commission agents. In view of the above, in

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respect of these agents, no disallowance of commission payment is culled for. Thus, the disallowance of Rs. 4,55,58659/- made by the A.O. is deleted.

The ground of appeal for this year is accordingly allowed.

12. The ITAT we find adjudicate this issue in Assessment Year 2013-14 upholding the order of the Ld. CIT(A) . The relevant findings of relating to which are at page 7 to 22 is reproduced hereunder:

9. Ground no.2 in both these assessment years is common. Grievance of the Revenue in this ground is that the ld.CIT(A) has erred in deleting the disallowance of Rs.1,53,17,547/- and Rs.1,51,52,353/- which was disallowed by the AO with aid of section 40(a)(i) of the Act on account of non-deduction of TDS on the foreign commission payment in the Asstt.Year 012-13 and 2013-14 respectively.

10. The facts on all vital points are common. Even the finding of the ld.CIT(A) is verbatim same except variation in quantum in both the years. Therefore, for the facility of reference we take up the facts from the Asstt.Year 2012-13.

11. The assessee has filed its return of income on29.11.2012 declaring total income at Rs.36,73,42,030/- which was revised to Rs.30,62,30,930/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. The assessee at the relevant time was engaged in the business of manufacturing and trading of agro processing, maize processing, cotton spinning as well as generating powers through windmills. On verification of TDS details, and CA certificate for foreign remittances it revealed to the AO that the assessee has debited foreign commission expenditure of Rs.1,56,17,547/-. He directed the assessee to explain as to why this commission be not disallowed. In response to the query of the AO, the assessee filed a detailed written submissions which was identically submitted before the ld.CIT(A), and we will be going to take note of the submission in the subsequent part.

The AO has gone through the submissions of the assessee and rejected the same for two reasons. In the first fold of reasoning, he observed that the assessee has not provided the identity and the evidence of services rendered by foreign commission agent for which the commission was paid. In this regard, he observed that no copy of agreement or documentary evidence in support of commission payment etc. was given by the assessee. In the second fold of reasoning, he observed that the assessee failed to deduct TDS on this amount, and therefore, it is not entitled for deduction under section 40(a)(ia) of the Act. Similar action was taken with regard to commission paid at Rs.1,51,52,353/- in the Asstt.Year 2013-14.

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12. Dissatisfied with the finding of the AO, the assessee carried the matter before the ld.CIT(A). It has filed detailed written submissions which has been reproduced by the CIT(A). For appreciating the facts and the stand of the assessee, we also deem it appropriate to take note of the submissions, which read as under:

“6.2. Appellant's submission:-

The relevant extracts from the submission of the appellant are reproduced here under:-

"8.2 The appellant in Assessment Proceedings, on the issue of foreign Commission u/s.

40(a)(i) of Rs. 153,17,547/-, furnished explanations to the AO vide letter dated 18-02- 2015, copy of reply filed in paper book (Pg. no. 173 to 385), the same is reproduced hereunder:

"Your goodself called for to furnish details of commission paid on export sales along with evidences regarding fixation of commission, debit notes from overseas brokers, related export sale and its realization along with payment by bankers and copies of Form no.

15CA & 15CB in this regard.

With regard to commission payment on export to overseas buyers, we furnish following details and explanations for justification of overseas commission and its payments:

1. The assessee company is in export of Yarn & cotton waste, Liquid glucose & starch i.e.

maize processed items and De-oiled Cake. The export summary of these items during the year 2011 -12 and payment of commission is as under:

Manufacturing items Export Sale Commission Agro Processing: DOC 3576946239 748632 Maize Processing:

Liquid Glucose & Starch 306863052 720535 Yarn Mfg.:

Yarn & Cotton Waste 1720000547 14148380

Total 5603809838 15617547

2. Yarn & cotton waste are exported through brokers, as most of the deal is through brokers who basically work from Taiwan, Hong Kong, Korea, Malaysia, Vietnam, Bangladesh, Philippines, Italy, Portugal, China and USA, as the product is used worldwide

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and demand comes from various countries through overseas brokers / commission agents working overseas. Whereas, very few demands comes through overseas brokers / commission agents for liquid glucose and starch and DOC.

3. It is further submitted that these overseas brokers / commission agents are providing export orders to us by searching / inquiring export import from their countries. These overseas brokers / commission agents also provides services for negotiating the rates, freight, conditions for payments, opening LCs of importers in foreign countries and informing us, take care of deliveries of goods to the importers and follow up for final payments, etc.

4. As called for by your goodself detailed chart containing name & address of broker, name & country of buyer to whom export was made, item exported, billed quantity, export value in USD and realization in INR with brokerage in USD and brokerage in INR amounting to Rs. 156,17,547/- furnished Exb-1.

5. Along with above chart, broker wise payment evidences along with bank payment details, company payment advice, Form no. 15CA and 15CB, debit note from overseas broker / commission agent, invoice for export by company with commission contract and export contract furnished as evidences for justification of commission to overseas brokers / commission agents and genuineness of the payments through banking channel and certificates for non-deduction of tax as the same is not applicable (Form no. 15CB) [Annexure 1 to 23].

In view of the above, it is submitted that the payments of commission to overseas brokers / commission agents is part of export of products and an important mediatory channel to book our export orders as well as to take care of realization of export proceeds. Thus, the commission to overseas brokers / commission agents is genuine and paid through banking channel on export orders procured and final realization of export proceeds. The same is expense for the purpose of business incurred by company in prudent way to increase export and increase customer base in foreign countries."

8.3 Furthermore, the appellant company in Assessment Proceedings, on justification of payment of foreign commission to overseas brokers / commission agents and applicability of taxes thereon, furnished letter to AO dated 20-02-2015, copy of reply filed in paper book (Pg. no. 386 to 388), the same is reproduced hereunder:

"In connection to the commission on export sales paid to overseas brokers / commission agents, we have furnished detailed reply vide letter dated 18-02-2015 with evidences related to foreign commission amounting to Rs. 156,17,547/-. Now, for justification of

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payment of commission to overseas brokers / commission agents and applicability of tax thereon, we furnish further submission as under for your kind perusal:

1. The assessee company is exporter of yarn, maize derivatives and DOC. In global market most of the export is done by company through its own sources and customers in overseas, but many times export inquiries come through overseas brokers / commission agents, who are situated in foreign countries and they have some local import demand.

They negotiate with us on behalf of such importers and finalize the deal, for this they charge commission either on percentage of export invoice or commission on per metric ton of export quantity.

2. These overseas brokers / commission agents are providing export orders to us by searching / inquiring export - import from their countries. These overseas brokers / commission agents also provides services for negotiating the rates, freight, conditions for payments, opening LCs of importers in foreign countries and informing us, take care of deliveries of goods to the importers and follow up for final payments, etc. However, they are not our agents in those countries. They work on behalf of many parties and on so many products / commodities independently.

3. As per provisions of section 5(2) of the IT Act, the total income of a person who is a non-resident is taxable in India, if it is received or is deemed to be received in India on behalf of such person or accrues or arises or is deemed to accrue or arise to him in India.

In analogy, we submit that the commission payment to overseas brokers / commission agents is not falling either of the two conditions of section 5(2):

(i) The payments are made to overseas brokers / commission agents in their countries through banking channel i.e. the payment is received by them in foreign country.

(ii) The commission accrues / arises in foreign countries as the commission is payable only when the Indian company receives payment of export sales. Such realization of export proceeds are released by foreign importer and at this juncture the activity of overseas brokers / commission agents come to an end, as the export payment is made by foreign bank from foreign country and at the same time the commission accrue or arise in foreign country to the overseas brokers / commission agents, if the payment does not realize, there will be no commission at all payable to such non-resident commission agents.

4. As per provisions of section 9(1 )(i) of the IT Act. Income deemed to accrue or arise in India, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India or through the transfer of a capital asset situated in India.

(15)

Explanation - 1: Business of which all the operations are not carried out in India.

It means: The overseas brokers / commission agents is not doing any business in India, they are merely providing export orders and facilitate to Indian company. The business means any activity of manufacturing of products similar to the assessee company.

Explanation - 2: Business connection shall include any business activity carried out through a person who, acting on behalf of the non-resident and has habitually exercise in India, habitually maintains stock of goods / merchandize in India, habitually secures orders in India under common control of non-resident. Provided that such business connection shall not include any business activity carried out through a broker, general commission agent or any other agent having an independent status and acting in the ordinary course of his business.

It means: The overseas brokers / commission agents is not having any business connection and carrying any business activity. Whereas, the non-resident is merely a commission agent or broker acting from foreign country and has independent status and not working under common control of Indian company at all.

In analogy, we submit that the commission payment to overseas brokers / commission agents cannot be said as income deemed to accrue or arise in India in the light of above Explanations to the provisions of section 9(l)(i) of the Act. In the matter of commission payment to overseas brokers / commission agents, it is submitted that commission does not accrue or arise or deemed to accrue or arise in India to such non-resident commission agents as they had rendered services outside India and commission was also paid to them outside India. Thus, the assessee company was no where under obligation to deduct tax from such commission payments to overseas brokers / commission agents as per provisions of section 195 of the IT Act.

5. In view of the above, it is submitted that the commission agent did not carry on any activity in India In the absence of any activity being carried in India by a non-resident commission agent, the commission does not accrue or arise in India.

Therefore, such payments are not taxable in India. Accordingly, such payments do not require any deduction of tax or tax withholding. However, the company has taken certificate in Form no 15CB from Chartered Accountants, which also states that no TDS is require on payment of commission to the non¬resident commission agents.

6. It is further submitted that as per Double Taxation Avoidance Agreement (DTAA) with the countries where the non-resident commission agents resides, in Article 7: Business income, states that the income from business is liable to be taxed in the country where

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the person is having permanent establishment. None of the non-resident commission agents are having any PE in India, complete addresses of such non-resident commission agents are provided in letter dated 18-02-2015.

In view of the above facts of the case and legal submission examining the applicability of various provisions of the IT Act, it is submitted that the payments of commission to overseas -brokers / commission agents made overseas are not liable to TDS /tax withholding as per provisions of section 195 of the IT Act."

8.4 In this regard, in the appellate proceedings, the appellant company on the issue of commission payment on export sale to non-residents, submits following facts and explanations for your kind perusal:

(i) The overseas brokers / commission agents are procuring export orders by searching / inquiring export - import from their countries. These overseas brokers / commission agents provide services for negotiating the rates, freight, conditions for payments, opening LCs of importers in foreign countries and informing us, take care of deliveries of goods to the importers and follow up for final payments, etc.

(ii) The appellant company has furnished a detailed chart containing name & address of broker / agents, name & country of buyer to whom export was made, item exported, billed quantity, export value in USD and realization in INR with brokerage in USD and brokerage in INR.

(iii) The appellant company has furnished along with above chart, broker wise payment evidences along with bank payment details, company payment advice, Form no. 15CA and 15CB, debit note from overseas broker / commission agent, invoice for export by company with commission contract and export contract furnished as evidences for justification of commission to overseas brokers / commission agents and genuineness of the payments through banking channel and certificates for non-deduction of tax as the same is not applicable.

(iv) The appellant company has submitted that the payments of commission to overseas brokers / commission agents is part of export of products and an important mediatory channel to book our export orders as well as to take care of realization of export proceeds. Thus, the commission to overseas brokers / commission agents is genuine and paid through banking channel on export orders procured and final realization of export proceeds. The same is expense for the purpose of business incurred by company in prudent way to increase export and increase customer base in foreign countries.

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(v) As per provisions of section 5(2) of the IT Act, commission income to non-residents is not taxable in India, as they arc providing services from their countries and the payment is also received to them in their country. Thus, the commission is neither received / deemed to be received in India on behalf of such person nor accrues or arises / deemed to accrue or arise in India. Similarly, commission payment to overseas brokers / commission agents cannot be said as income deemed to accrue or arise in India in the light of above Explanations to the provisions of section 9(1 )(i) of the Act.

(vi) The commission payment to overseas brokers /commission agents does not accrue or arise or deemed to accrue or arise in India as they had rendered services outside India and commission was also paid to them outside India. Thus, the assessee company was no whereunder obligation to deduct tax from such commission payments to overseas brokers A commission agents as per provisions of section 195 of the IT Act.

(vii) As per Double Taxation Avoidance Agreement (DTAA) with the countries where the non-resident commission agents resides, in Article 7: Business income, states that the income from business is liable to be taxed in the country where the person is having permanent establishment. None of the non-resident commission agents are having any PE in India, complete addresses of such non-resident commission agents are provided in above details.

(viii) An analysis of commission to non-residents for the FY 2008-09, FY 2009-10, FY 2010-11 and FY 2011-12 furnished (Pg. no. 395 to 397), which shows that this is not a new payment, but paid from last so many years and allowed by IT Department in all past years.

(ix) It is also submitted that in assessment proceedings, evidences with regard to identity and genuineness of non-residents commission agents: We have submitted most of evidences with regard to identity, services rendered by the foreign commission agent, payment evidences for foreign commission expense and evidences for genuineness of transactions on sample basis. Such evidences are in the nature of Agency Agreement, Tax Residency Certificate, Debit note, Export invoices, Shipping Bill, Bank certificate for export realization, commission payment Swift message by bank and emails.

(x) The Appellant company has applied for NIL Tax Withholding Certificates, for Payment of commission to Non-Residents towards export sales under the provisions of section 195(2) of the Act, as discussed by AO on Page no. 24 in Para no. 7.8 of the Assessment Order for the financial year 2014-15 on 24-03-2015, against this NIL withholding certificate is issued by ITO, International Taxation-I, Ahmedabad vide Certificate dated 31-03-2015, copy furnished (Pg. no. 398 to 401). Furthermore, similar certificate was applied for the year 2015-16, vide Application dated 09-04-2015, the ITO, International

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Taxation-I, Ahmedabad vide Certificate dated 10-04-2015 authorized the appellant company to pay or credit commission to various non-residents towards export sales, without deduction of tax at source, copy furnished (Pg. no. 402 to 405). The Certificate from International Taxation Division certifying to pay commission to various non¬residents towards export sales, without deduction of tax at source, itself shows that there is no need to deduct tax on such payments.

8.5 The AO has made various observations in assessment order on commission payment to non-resident rebuttal to such observations of the AO are furnished:

Para No. AO’s Observations Rebuttal by Appellant Company

7.3 The above reply of the assessee has been carefully considered but the same is not found acceptable. The

assessee has not' provided the identity and "the evidences of services rendered by the foreign commission agent for which commission was paid by the assessee. No copy of agreement or documentary evidences in support of commission payment etc. was given by the assessee which could justify the

reasonableness of the commission payment to the nonresident as well as the genuineness of expenditure incurred for the purpo.se of business. Therefore, in absence of copy of agreement with the foreign commission agent, identity of commission agent and evidences

pertaining to services rendered by the foreign commission agent having nexus with the business of the assessee, the payment of foreign commission expenses is not found genuine.

The appellant company has furnished following evidences in connection to commission payments to non-residents:

' ; \ 1 \

(i) Copies of Contract with commission agent and contract with exporter.

(ii) Copies of invoices / debit notes j raised by commission agent. |

(iii) Copies of Form no. 15CA &

Form no. 15CB for payment in foreign currency.

(iv) Bank payment swift copy.

(v) Copy of shipping bill for commission reference, etc.

These documents are sufficient to prove genuineness of the

commission payments and identity of commission agents.

7.6 Under section 9(1 )(i) of the As per provisions of section

(19)

Act, income accruing or arising directly or indirectly, through or from any business connection in India or source of income in India shall be deemed to accrue or arise in India. No doubt the agents must have rendered services abroad and have solicited orders there from, but the right to receive the commission arises in India when the order is executed by the assessee in India and therefore the income accrued i sourced in India.

5(2) of the IT Act, commission income to non-residents is not taxable in India, as they are providing services from their countries and the payment is also received to them in their country. Thus, the commission is neither received / deemed to be received in India on behalf of such person nor accrues or arises / deemed to accrue or arise in India.

Similarly, commission

payment to overseas brokers / commission agents cannot be said as income deemed to accrue or arise in India in the light of above Explanations to the provisions of section 9(1 )(i) of the Act.

7.7 The assessee company instead of complying the aforesaid provisions of law as specified in section 195 relied heavily on the erstwhile circular of the CBDT No. 786 dated 7/2/2000.

As .regards the applicability of. the said Circular it is mentioned that the said circular has since been withdrawn by CBDT's circular No. 7 of 2009 dated 22nd October, 2009, there is no existence of the Circular of CBDT which has been relied upon while deciding the issue of withholding of tax at source u/s 195 of the Act.

The appellant company has not discussed single line about Circular no. 786 dated 07-02- 2000 or Circular no. 7 of 2009.

Whereas, the appellant company has merely stated that the commission payment to overseas brokers /

commission agents does not accrue or arise or deemed to accrue or arise in India as they had rendered services outside India and commission was also paid to them outside India.

Further, as per Double Taxation Avoidance

Agreement (DTAA) with the countries where the non- resident commission agents resides, in Article 7: Business income, states that the income from business is liable

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to be taxed in the country where the person is having permanent establishment.

None of the non-resident commission agents are having any PE in India, complete addresses of such nonresident commission agents are provided in above details.

7.8 Thus, the assessee Company has also failed to comply with the provisions of section 195(2) of the Income Tax Act 1961 while deciding the issue of applicability or otherwise of withholding tax u/s 195 of the Income fax Act 1961. Having failed to make an application before the Assessing Officer as prescribed u/s 195(2) of the Act, to determine the

chargeability and TDS liability, the assessee acted unilaterally by not deducting tax at source u/s 195 of the Act.

The provisions of Act also give authorization to Chartered Accountants to issue

Certificates in Form No. 15CB for payment in foreign currency, the appellant company complied with the same.

As the foreign commission is not taxable in India, the appellant company instead of approaching to the AO, approached to the Chartered Accountant to issue

Certificate, which comply the provisions.

7.9 It is clear that the assessee was under obligation to deduct tax at source as envisaged u/s 195 of the Act from the payments of commission made to non- resident agents towards the services rendered by

them.*The assessee, however had failed to discharge the obligation. Therefore, the expendituretlaimed under the head Commission expenses paid.to nori residents is disallowed and added back to income u/s 40(a)(i) of Income Tax Act

It was explained that neither services are rendered by non- residents in India nor

payments are made to non- residents in India. Also the non-resident agents are not having any Permanent Establishment in India, therefore, the commission is not taxable under any provision of Income Tax Act, hence, no TDS was deducted from such commission payment to nonresidents for export sales.

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8.6 In this regard, the appellant company on the issue of payment of commission to non- residents, relies on following decisions of Jurisdictional High Court, Tribunals, other High Courts and Tribunals, where it is held that loans and advances to subsidiaries on account of commercial expediency and incidental to the assessee's main business activity, loss on account of irrecoverable loan given to subsidiary companies in the normal course of business is allowable as revenue loss:

(i) GE India Technology Center (P). Ltd vs. CIT & Ors. (2010) 327 ITR 456 (SC)

"A person paying interest or any other sum to a non-resident is liable to deduct tax under s. 195 only if such sum is chargeable to tax in India and not otherwise."

13. The ld.CIT(A) has gone through the submissions of the assessee, and held that it has submitted all necessary details exhibiting the fact that payment was made through banking channel. All foreign commission agents are identifiable. Copies of the invoices and the contract with commission agents, copies of form no.15CA and 15CB for payment in foreign currency, copies of shipping bills were produced. The ld.CIT(A) has further observed that TDS under section 195 was required to be deducted if element of income involved in those foreign commission. In other words, if the alleged foreign agents were liable to tax with India only then element of income would be involved, on such payments and tax would be required to be deducted. For harbouring this plea, the ld.CIT(A) made reference to the decision of Hon’ble Supreme Court in the case of GE India Technology Centre Pvt. Ltd., 327 ITR 456. In this way, the ld.CIT(A) has deleted the disallowance in both the years.

16. With the assistance of the ld.representatives, we have gone through the record carefully. A perusal of the assessment order would indicate that the ld.AO has disallowed the claim of commission expenses on two counts viz. (a) the assessee failed o submit basic details i.e. identity of the agents, copies of invoices and the contract agreement with the commission agents etc., (b) it failed to deduct TDS under section 195 of the Income Tax Act. As far as first fold of reasoning is concerned, a perusal of the assessee’s submissions which has been accepted by the ld.CIT(A) it is evident that this finding of the AO is factually incorrect. The submissions made in tabular form and extracted by us on page no.15 of this order would indicate that the assessee has demonstrated that all these details have specifically been filed. The assessee has filed certificate of the chartered accountant obtained in form No.15CA and 15CB with regard to foreign remittance. It has filed copies of contracts with the commission agent and contract with exporter. Thus, it has given all basic details demonstrating the fact as to how these agents have facilitated in making sales outside India.

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17. As far as second fold of reasoning is concerned, TDS under section 195 was required to be deducted if the income in hands of the alleged agents was taxable within India. The ld.CIT(A) has examined the issue elaborately and recorded the finding that these agents have no permanent establishment in India. They are not operating from India and alleged commission income received by them is not taxable in India. Thus, according to the CIT(A) on the strength of Hon’ble Supreme Court decision in the case of GE India Technology Centre P.Ltd. (supra) if the remittances do not contain element of income, then TDS was not required to be deducted. This aspect has been examined in host of decisions. Before us, the ld.counsel for the assessee put reliance upon the order of the ITAT in the case of DCIT Vs. Panchmahal Steel Ltd., ITA No.634/Ahd/2017. In this order, Tribunal has relied upon order of the Tribunal passed in the case of DCIT Vs.

Welspun Corporation Ltd., 77 taxmann.com 165 (Ahd). Discussion made in the decision of Welspun Corporation Ltd. (supra) has been taken note of, which reads as under:

• The assessee-company was a global manufacturer of steel pipes, plates and coils, offering the highest quality of pipes. The manufacturing activities performed by the company were highly technical in nature. The manufacturing of specialised pipe was a highly technical activity involving a highly-technical complex exercise of technology and skilled labour and the finest grade of raw materials. To procure orders, the company required specialist agents who could understand the technical nitty-gritty of the assessee's business and could demonstrate the assessee's business profile and the quality of the products of the assessee to the potential clients to convince them to enter into a contract with the assessee for supply of the pipes etc. and other allied works.

• In order to perform the aforesaid highly technical activity, the assessee entered into a contract with foreign agents. In terms of the agreement, the agent was to develop, expand and promote the sales and marketing for assessee's products, make market plans and establish a marketing network of representatives to help and promote assessee's products, to provide information such as market development, activities of competitors, intentions and plans of clients and financial information on clients, to provide advanced information about the tenders, gathering technical specifications of project and work incidental thereto, and to identify sub-contractors and logistic service provider, such as shippers and cargo handling agencies, to ensure the smooth execution of contracts.

• During relevant year, the assessee made payment of export commission to commission agents without deducting tax at source. The assessee claimed that the export commission was not a service and if at all they are being construed as services, the same was being rendered outside India and was not taxable in India under section 5(2). Accordingly, the tax was not required to be withheld under section 195.

• The Assessing Officer held that the responsibilities of agents showed that agents were required to render technical services, allow the use of information containing industrial, commercial and technical experience which was made available to the

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assessee, and that the consideration received for these services was nothing but fees for technical services. These payments according to the Assessing Officer were taxable under section 9(1)(vii). Therefore, the assessee was liable for tax deduction at source from these payments under section 195.

• On appeal, the Commissioner(Appeals) held that the payments could not be held to be FTS and they were in the nature of commission earned from services rendered outside India which did not have tax implications in India.

6. The Tribunal made elaborate discussion on all possible angles in this judgment, and thereafter concluded as under:

“41. We are in considered agreement with the views so expressed by the coordinate bench. In view of these discussions, as also bearing in mind entirety of the case, we uphold well reasoning findings of the learned CIT(A) that the commission payments made to the non-resident agents did not have any taxability in India, even under the provisions of the domestic law i.e. Section 9. Once we come to the conclusion that the income embedded in these payments did not have any tax implications in India, no fault can be found in not deducting tax at source from these payments or, for that purpose, even not approaching the Assessing Officer for order under section 195. In our considered view, the assessee, for the detailed reasons set our above, did not have tax withholding liability from these payments. As held by Hon'ble Supreme Court in the case of GE India Technology Centre (P.) Ltd. v. CIT [20101 327 ITR 456/193 Taxman 234/7 tax.mann.com 18, payer is bound to withhold tax from the foreign remittance only if the sum paid is assessable to tax in India. The assessee cannot, therefore, be faulted for not approaching the Assessing Officer under section 195 either. As regards the withdrawal of the CBDT circular holding that the commission payments to non-resident agents are not taxable in India, nothing really turns on the circular, as de hors the aforesaid circular, we have adjudicated upon the taxability of the commission agent's income in India in terms of the provisions of the Income Tax Act as also the relevant tax treaty provisions.”

17. Therefore, considering the facts and circumstances of the present case, in the light of the above discussion, we are of the view that the ld.CIT(A) has examined issue with all possible angle in order to find out whether commission paid by the assessee is genuine or alleged commission has element of income taxable in India. After satisfying himself on both the counts, the ld.CIT(A) has allowed deduction of the above expenditure to the assessee in both these assessment years. On due consideration of the detailed finding, we do not find any merit in the grounds of appeal raised by the Revenue.

Accordingly, ground no.2 is rejected in both the assessment years.

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13. Further Ld. Counsel for the assessee pointed out from page 42 of the Ld.CIT(A)

‘s order that an analysis of commission paid to non residents for the impugned year and preceding years was filed which clearly brought out the new commission agents from point No.11-20 as under:

SN. Broker Name, Address, City 2013-14 2012-13 2011-12 2010-11

USS INR USS INR USS INR US! INR

11 SHAHID TEXTILES LTD Room 2207-2208, 22/F, Phase 2 Metro Cenlre, 21 Lam Hlng SIreet Kowloon Bay, Kowllon HONG KONG

6682.03 383160 0 0 0 0 0 0

12 SINO-PAK TEXTILE

#115,F-1236. Tawalla, Bansanwala Chuna Mandi LAHORE, PAKISTAN

3977.12 217250 0 0 0 0 0 0

13 KEYWIN TRADING LTD Room 702. Times International fluid. No. 167 Dong Feng West Road, Guang Zhou, CHINA

4557.42 267978 0 0 0 0 0 0

14 BIDEWITEX TRADING L.L.C.

All Bin Taleb Street, Dubai U.A.E

5657.60 360771 0 0 0 0 0 0

15 SHANGHAI JIUTIAN NDUSTRIAL CO.LTD Room 412, Building A, No.

4226 Ouzhuang, Minhang Area, Shanghai, CHINA

3778.51 234268 0 0 0 0 0 0

16 DEKA EXIM PTE LTD 04-04.

KALLAN AVENUE 1 SINGAPORE

4295.48 266320 0 0 0 0 0 0

17 OPULENT INTERNATIONAL 38-Baber Block, New Garden Town, Lahore, PAKISTAN

2600.73 161245 0 0 0 0 0 0

18 SKYTEX TEXTILE CONNECTION 5-E. Architects Housing Society shore PAKISTAN

3535.44 219387 0 0 0 0 0 0

19 PARITAS TRADING CORPORATION Unit 605 Park Trader Center, 716 Investment Dirve Madrigal Business Park Ayala labag 1760Muntinlupa City HILIPPINES

5628.51 345695 0 0 8566,83 393507 0 0

20 XALTCO INTERNATIONAL 6NERAL TRADING LLC 0 No.22752, eira Tower Unit 215 uba! U.A.E

2224716.89 31797415 0 0 0 0 0 0

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14. He further pointed out from page 44-47 of the Ld.CIT(A)’s order that with respect to these new agents all evidences proving their genuineness as also the fact that the commission income did not accrue or arise in India nor was paid in India so as to be liable to TDS, was filed . In all the cases he pointed out that the following evidences were filed

(i) Copies of email communication with broker,

(ii) Ledger a/c and confirmation balance of Hannmak Ltd.

(iii) Certificate from Hannmak Ltd for No PE in India,

(iv) Copies of Contract with commission agent and contract with exporter having name of Agent,

(v) Copies of invoices / debit notes raised by commission agent,

(vi) Copies of Form no. 15CA & Form no. 15CB for payment in foreign currency, (vii) Bank payment swift copy.

15. That considering the above the Ld.CIT(A) had deleted the disallowance made of commission expenses for non deduction of tax at source.

16. Ld.DR though was unable to contradict the findings of the Ld.CIT(A) however relied on the order of the AO .

17. We have heard both the parties. We have noted that Ld. CIT(A) deleted the

disallowance of commission expenses finding that the issue was identical to that in

Assessment Year 2013-14 wherein identical disallowance was deleted and further

noting on facts that most of the commission agents were same as in Assessment Year

2013-14, while the new commission agents fulfilled the criteria laid down for non

deduction of tax at source on the commission so paid.We have also noted that the

ITAT has upheld the order of the Ld. CIT(A) in Assessment Year 2013-14. Since the

the Ld. D.R. was unable to point out any distinguishing fact before us nor was any

decision of the higher authorities brought to our notice holding to the contrary nor

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any infirmity pointed out in the findings of the Ld.CIT(A) vis a vis the new commission agents, we see no reason to disagree with the Ld.CIT(A).the deletion of disallowance of commission expenses amounting to Rs.4,55,58,659/- is accordingly upheld.

18. Ground no. 2 raised by the Revenue is therefore dismissed.

19. Ground No 3-5 are general in nature and are therefore not being dealt with by us.

20. In effect, appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 25-02-2022

Sd/- Sd/- (SUCHITRA KAMBLE) (ANNAPURNA GUPTA)

JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad : Dated 25/02/2022

आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee

2. Revenue

3. Concerned CIT 4. CIT (A)

5. DR, ITAT, Ahmedabad 6. Guard file.

By order/ आदेश से ,

उप / सहायक पंजीकार आयकर अपील य अ धकरण ,

अहमदाबाद

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