Brief of the case:
- The Hon’ble Madras High Court in the case of CIT vs. M/s Orient Express held that services of non-resident agent facilitating the completion of export obligations cannot be termed as technical services provided in India because such services are not provided for the purposes of running of the business of the assessee in India.
- Thus, no income can be deemed to accrue or arise in India within the meaning of sec 9(1)(vii) of the Act.
Facts of the case:
- The assessee was engaged in manufacturing and exporting of leather garments. In its ROI claimed expenditure of commission paid to non-resident agent. The AO disallowed the same on the ground that assessee has failed to deduct the tax at source u/s 195 as it was liable to be deducted because the commission income in the hands of agent is an income deemed to accrue or arise in India.
- The tribunal rejected the contention of revenue and held in the favour of assessee by holding that the revenue failed to prove that the agent provides technical services and has also not brought any material to prove to prove that the income can be attributable to the operations of foreign agent in India.
Contention of the Revenue:
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