Appeals Dismissed on Non-Taxable Foreign Commission under Income Tax Act

The appeals against orders passed by the National Faceless Appeal Centre regarding the addition of foreign commission without TDS under Section 40(a)(i) of the Income Tax Act for Assessment Years 2012-13, 2013-14, and 2014-15 were dismissed. The ITAT upheld the CIT(A) order, following the Supreme Court's decision that non-resident commission agents not conducting business operations in India are not taxable in India. The commission earned by non-residents for services outside India was deemed not taxable in India, leading to the dismissal of the Revenue's appeals for all three assessment years.

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Issues involved:
The judgment involves appeals against orders passed by the National Faceless Appeal Centre regarding addition of foreign commission without TDS under Section 40(a)(i) of the Income Tax Act for Assessment Years 2012-13, 2013-14, and 2014-15.

A.Y. 2012-13:
The assessee, engaged in Export Trading of Cotton Yarn, paid commission to a non-resident foreign agent without deducting TDS. The AO disallowed the commission expenses under Section 40(a)(ia) of the Act, but the CIT(A) deleted the addition based on the judgment in CIT vs. Toshoku Ltd. The ITAT upheld the CIT(A) order, citing the Supreme Court's decision that non-resident commission agents not conducting business operations in India are not taxable in India.

The ITAT considered the Supreme Court's ruling and the Co-ordinate Bench's decision, concluding that the commission earned by non-residents for services outside India is not taxable in India. Therefore, the Revenue's appeal was dismissed as it lacked merit.

The decision for A.Y. 2012-13 also applies to A.Ys. 2013-14 & 2014-15, resulting in the dismissal of all three appeals filed by the Revenue.

This Order was pronounced on 12/07/2023.

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