Treaty taxation of non-resident agent commission and travel reimbursements: services outside India did not trigger withholding tax.

Commission paid to a non-resident agent for services rendered outside India in contacting and negotiating with foreign artists was not taxable in India under Article 18 of the Indo-UK DTAA, because the agent did not perform any personal activities in India as an entertainer or athlete. Documented reimbursement of travel and related performance expenses was likewise not treated as income derived from personal activities in India. As tax had already been deducted on the artists' performance fees, the commission and reimbursement did not independently attract a withholding obligation. The revenue challenge therefore failed on the taxability and source-deduction issue.

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Issues: Whether commission paid to the non-resident agent and reimbursement of travel/performance expenses for foreign artists were taxable in India under Article 18 of the Indo-UK DTAA, and whether the assessee was obliged to deduct tax at source.

Analysis: The controversy was confined to payments made to the agent and reimbursement of expenses connected with the artists' visit and performance in India. The factual findings accepted by the Tribunal were that tax had already been deducted on the fees paid to the artists for performance in India, while the commission to the agent was for services rendered outside India in contacting and negotiating with the artists. The reimbursement component was found to be toward air travel and supported by documents. On these facts, the Tribunal held that Article 18, especially clause (2), did not apply to the agent's commission because he did not perform any personal activities in India as an entertainer or athlete. The reimbursement of expenses was also not treated as income derived from personal activities in India. The Assessing Officer's invocation of tax deduction obligations was therefore rejected.

Conclusion: The commission paid to the agent and the reimbursement of expenses were not taxable in India under Article 18, and there was no obligation to deduct tax at source on those payments.

Final Conclusion: No substantial question of law arose, and the Revenue's challenge failed on the merits of the taxability and withholding issue.

Ratio Decidendi: Where a non-resident agent renders services outside India and does not participate in the performance in India, commission paid to the agent is not taxable in India under the entertainers' article of the relevant treaty, and reimbursement of documented travel expenses does not itself create a withholding-tax obligation.

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