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Commission to foreign agents outside India not subject to TDS under section 195 The ITAT Mumbai ruled in favor of the assessee regarding TDS u/s 195 on commission paid to foreign agents. The assessee paid commission to non-resident ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Commission to foreign agents outside India not subject to TDS under section 195
The ITAT Mumbai ruled in favor of the assessee regarding TDS u/s 195 on commission paid to foreign agents. The assessee paid commission to non-resident agents in Italy, France, Greece, and Lebanon for procuring export orders outside India. The Tribunal held that since the services were rendered outside India by agents without any permanent establishment in India, and payments were made outside India under existing DTAAs, the commission income could not be deemed to have accrued or arisen in India. The Tribunal relied on its earlier decisions in the assessee's own case for AY 2010-11 and 2012-13, ruling against the revenue department.
Issues involved: Appeal by revenue against deletion of addition for commission paid to foreign agent.
Summary: The appeal was filed by the revenue against the order of the Ld. Commissioner of Income Tax/NFAC for the assessment year 2016-17. The main issue raised was the deletion of the addition in respect of commission paid to a foreign agent amounting to Rs.1,61,90,101/-. The assessee, engaged in manufacturing and exporting, filed its return of income declaring a total income of Rs.7,74,27,070/-. The AO made an addition of Rs.1,61,90,101/- under section 143(3) of the Income Tax Act, 1961. The Ld. CIT(A) deleted the addition based on previous Tribunal decisions and a High Court ruling. The revenue appealed this decision.
Upon hearing both parties, it was noted that the assessee paid commission to agents outside India for procuring export orders. The AO contended that tax should have been deducted under section 195 as the agents were providing consultancy services. The Ld. CIT(A) deleted the addition, citing agreements with non-resident agents and previous Tribunal decisions. The Tribunal upheld the Ld. CIT(A)'s decision based on legal precedents and lack of change in facts or law. The revenue's appeal was dismissed, affirming the action of the Ld. CIT(A) and referencing previous court decisions. The AO for a subsequent year also allowed the commission payment without TDS. Ultimately, the appeal of the revenue was dismissed, and the order was pronounced on 29/02/2024.
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