COMMISSIONER OF INCOME TAX Vs. ANGELIQUE INTERNATIONAL LTD

JUDGEMENT

(1.) Revenue by this appeal under Section 260A of the Income Tax Act (Act, for short) claims that the assessee had defaulted and failed to deduct tax at source on commission/discount on sale of Rs.37,87,26,158/- paid to non-residents situated outside India and who do not have any office or permanent establishment in India. This amount of Rs.37,87,26,158/-, actually paid and incurred as expenditure by the respondent assessee, has been disallowed relying upon Section 40(a)(i) of the Act.

(2.) Factually, there is no dispute and it is accepted that the payments were made and are genuine payments. It is accepted that the parties to whom payments have been made do not have permanent establishment in India. These third parties were paid for having procured or obtained export orders, clearance of goods abroad, support in scheduling timely inspection of goods, insurance, clearance, follow up, arranging payments etc. The payments made to these foreign parties were within the limit prescribed by Reserve Bank of India and were made through proper banking channels.

(3.) The respondent assessee has relied upon Circular Nos. 23 dated 23rd July, 1969, 163 dated 29th May, 1975 and 786 dated 7th February, 2000. The latter two circulars were by way of clarification.