IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 415/Agr/2025 Assessment Year: 2020-21 Assessment Year: 2020-21 Assessment Year: 2020-21 Assessment Year: 2020-21 Assessment Year: 2020-21 Assessment Year: 2020-21 Assessee by Sh. Pankaj Gargh, Advocate Department by Sh. Shailendra Srivastava, Sr. DR Date of hearing 18.12.2025 Date of pronouncement 15.01.2026

ORDER

PER : SUNIL KUMAR SINGH, JUDICIAL MEMBER:

This appeal has been preferred by assessee against the impugned order dated 24.06.2025 passed in Appeal No. NFAC/2019- 20/10177025 by the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2020-21, wherein learned CIT(A) has allowed assessee’s first appeal for statistical purposes, deleting the disallowance made by the Assessing Officer.

2. Briefly stating, the appellant assessee is a partnership firm and was engaged in the business of manufacturing and export of footwear. It filed its return of income for A.Y. 2020-21, declaring total income of Rs. 93,11,120/-. Subsequently, the case was selected for scrutiny under CASS. During the course of assessment proceedings, The Assessing Officer observed that the assessee has debited an amount of Rs.2,53,06,886/- to the profit and loss account towards the commission paid outside India, further observing that the assessee failed to deduct tax on the above payments as per TDS provisions u/s. 195 of the Act and called for the response of the assessee. Assessee submitted that assessee’s business entails services of foreign commission agents to deal with foreign clients and they have made payments for the foreign agents commission and trade fair expenses etc. The foreign commission agent was non-resident and had no income chargeable to tax in India. Assessee submitted Form 15CA of commission remittance issued by the foreign commission agent, giving details of sales. Assessee further submitted the copy of declaration by the foreign commission agent Pro- Moda Srl Italy dated 01.01.2019 and 01.01.2020, declaring that there is no PE (permanent establishment) in India, as there is no office or any staff in India. Copy of Italian citizenship of foreign agent and copy of Income-tax declaration of foreign agent was also filed. This apart, the copy of agreement executed between the foreign agent Pro-Moda Srl Italy and assessee, M/s. Emco Exports for calendar year 2019-20 was also filed. Copies of relevant bank statements in respect of payment of commission were also filed. Learned Assessing Officer was not satisfied with assessee’s response and the aforesaid commission paid outside India without deduction of tax at source, was disallowed u/s. 40(a)(i) of the Act and added to the income of the assessee.

3. Assessee preferred first appeal before learned CIT(A). Learned CIT(A) found that the issue of commission payment to foreign agent also arose in assessment year 2022-23 and no adverse inference was drawn and the expenses towards commission paid to the foreign agent was accepted by the department. Learned CIT(A) further observed that the department has accepted the stand of assessee earlier and there was no deduction for making payment to non-resident agents, wherein identical facts and payments to the same non-resident agent has been made. He, accordingly, deleted the disallowance made by the Assessing Officer.

4. The revenue is in appeal against the impugned order passed by learned CIT(A) on the following grounds :

“1. That the CITIA) has erred on facts and in law in deleting the addition of Rs. 2,53,06,886/- by relying upon the provisions of Section 9 of the Income Tax Act, 1961, which are applicable to non-residents, who in the present case is the foreign agent and not to the assessee. The CIT(A) failed to appreciate that the assessee, being the payer/deductor in the present case, is governed