Non-resident agent commission and expense reimbursements were not taxable in India, so no withholding tax applied.

Commission paid to a non-resident foreign agent for services rendered outside India in coordinating and procuring artistes was treated as business profits under the applicable treaty and taxable only in the State of residence, so no tax was deductible at source in India. Reimbursement of actual travel and related expenses was also found, on the facts, to be a mere reimbursement simpliciter and not income chargeable to tax, so no withholding obligation arose on that amount either.

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Issues: Whether commission paid to a non-resident foreign agent and reimbursement of expenses paid in connection with artistes' performances in India were chargeable to tax in India so as to attract deduction of tax at source.

Analysis: The commission was paid to the foreign agent for services rendered outside India in coordinating and procuring artistes, and there was no material to show that the agent performed any personal activities in India or had a permanent establishment in India. On the applicable treaty provisions, such commission fell under the business profits article and was taxable only in the State of residence. The reimbursement amounts were found, on the facts, to be actual reimbursements of travel and related expenses, and reimbursement simpliciter does not constitute income chargeable to tax.

Conclusion: The commission paid to the non-resident agent was not taxable in India and no tax was required to be deducted at source on that payment. The reimbursement of expenses was also not chargeable to tax and no tax deduction obligation arose. The revenue's appeal was therefore rejected.

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