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JUDGMENT R.Sudhakar, J. - The appeal has been filed by the Revenue challenging the order of the Income Tax Appellate Tribunal, Chennai 'D' Bench, dated 23.4.2013 made in ITA No.2095/Mds/2012 for the assessment year 2009-2010. 2.1. The facts in a nutshell are as under: The assessee is a company engaged in the business of manufacture and export of articles of leather. In the course of business, the assessee entered into an Agency Agreement with a non-resident agent to secure orders from various customers, including retailers and traders, for the export of leather shoe uppers and full shoes by the assessee. As per the terms of the Agency Agreement, the business will be transacted by opening letters of credit or by cash against document basis. The non-resident agent will be responsible for prompt payment in respect of all shipments effected on cash against document basis. The assessee undertook to pay commission of 2.5% on FOB value on all orders procured by the non-resident agent. The said commission paid by the assessee was claimed as expenditure in terms of Section 37 of the Income Tax Act (for brevity, "the Act"). 2.2 The Assessing Officer disallowed the above said claim of the assessee under Section 40(a)(i) of the Act and held that payment of commission to the non-resident agent is to be dealt with in accordance with the provisions of Section 9(1) read with Section 195 of the Act. In paragraph (5) of the assessment order, referring to Section 9(1)(i) of the Act, the Assessing Officer held that the payment made to non-resident agent abroad is deemed to have been arisen in India. However, in paragraph (11) of the assessment order, the Assessing Officer held that the amount paid over to the non-resident agent is deemed to have accrued or arisen in India under Section 9(1)(vii) of the Act and the assessee failed to discharge its onus to prove that the payments were not made for the services covered under Section 9(1)(vii) of the Act. On this premise, the Assessing Officer concluded that since the assessee had not deducted tax at source on the payments made to the non-resident agent, as required under Section 195 of the Act, the claim made by the assessee that the…

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