Commission earned by non-resident agent deemed received in India upon crediting. Court rules for tax liability.

The Andhra Pradesh High Court held that commission earned by a non-resident firm acting as a sales agent for an Indian company is deemed received in India upon crediting in the agent's account, even if remitted later. The court rejected arguments that the commission should be deemed received in the non-resident's home country. The commission was considered received in India as it was payable from sale proceeds in India and credited by the Indian company. The court ruled in favor of tax liability under section 4(1)(a) of the Income-tax Act, upholding the department's assessment with costs and advocate's fee.

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Issues:
1. Tax liability on commission earned by a non-resident under section 4(1)(a) of the Income-tax Act.

Analysis:
The judgment by the Andhra Pradesh High Court dealt with the issue of tax liability on the commission earned by a non-resident firm acting as a sales agent for an Indian company. The non-resident firm was appointed as a selling agent based on a commission agreement with the Indian company. The Income-tax Officer assessed the non-resident firm under section 4(1)(a) of the Act, treating the commission as received in India. The Appellate Assistant Commissioner and the Tribunal upheld this assessment. The crucial point of contention was whether the commission should be deemed received in India or in the non-resident's home country at the time of remittance after obtaining a license.

The court referred to previous judgments involving similar scenarios where the receipt of money was determined based on the crediting of the amount in the books of the statutory agent. The court emphasized that the location of the statutory agent or the utilization of funds in India did not alter the fact that the commission was received by the non-resident firm in India upon crediting. The court rejected the argument that the money should be deemed received in the non-resident's home country, highlighting that the commission was payable out of sale proceeds received in India and credited to the non-resident's account by the Indian company.

The court cited previous judgments to support the principle that once the commission amount is credited in the agent's account, it is deemed received by the non-resident firm. The court clarified that the timing of remittance instructions did not affect the receipt of money, as the crucial factor was the crediting of the amount. The court concluded that the commission earned by the non-resident firm was liable to tax under section 4(1)(a) of the Income-tax Act, affirming in favor of the department with costs and advocate's fee.

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