The assessee paid amount towards selling commission, exhibition expenses and testing expenses to non-resident entities without deduction of tax source. The A.O. disallowed the payments by applying section 40(a)(ia) by consideration Explanation 2 to section 195 that was introduced by the Finance Act, 2012. 

The Tribunal noted that the commission paid to non-resident entities in respect of sales effected, services rendered and the payments made were all outside India. The commission could not be held chargeable to tax in India. Similarly, the exhibition expenses were outside India and not fall in the category of income which has accrued or arisen or deemed to accrue or arise in India.  ( AY. 2013-14 , 2014 -15 )