The assessee had made expenditure in the previous year relevant to AY 2009-10 on account of payments of commission to non-resident agents outside India. The AO disallowed the expenditure u\/s 40(a) for non-deduction of tax at source. The CIT(A) deleted the disallowance on the basis that the amounts were not chargeable to tax in India. On appeal to the ITAT, held, allowing the appeal:<\/p>\n
In respect of the issue as to whether the Assessee was liable to deduct TDS u\/s 195 and whether the disallowance was liable to be made u\/s 40(a)(ia) of the Act, it is noticed that the provisions of s. 195 has been amended by the introduction of the Explanation-II to the said section by the Finance Act, 2012, with retrospective effect from 1.4.1962, whereby it is clarified that \u2018the obligation to comply with sub-section (1) and to make deduction thereunder applies and shall be deemed to have applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non-resident person has (i) a residence or place of business or business connection in India\u2026\u2019 In view of the introduction of Explanation II to s. 195\u2026 the disallowance\u2026 would have to be restored\u2026<\/p><\/blockquote>\n