Disallowance u/s 40(a)(ia) for not deducting TDS u/s 195 in the absence of PE and business connection in India not justified

The only issue in this appeal of revenue is against the order of CIT(A) deleting the disallowance made by AO by invoking the provisions of section 40(a)(ia) of the Act for non-deducting TDS u/s. 195 of the Act.

The assessee is engaged in manufacturing of plywood where imported timber is being used. During the relevant previous year assessee has imported wood logs from outside India. Assessee has made payment of Rs.32,46,905/- to the exporter on its sale these woods to the assessee on F.O.R. basis. The assessee has made payment outside India on the basis of import licence and remittances were made through proper banking channel. There is no PE of the exporter in India rather there is no business connection with Indian importer except exporting of timber logs rather the Indian party as i.e. the assessee imported the goods. In term of the above and in the given facts of the case, this issue is squarely covered by the decision of   Hon’ble Supreme Court in the case of GE India Technology Centre P.
Ltd. Vs. CIT (2010) 327 ITR 456 (SC).