TaxTMI 
TaxTMI 
2015 (3) TMI 189
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....t Commissioner of Income Tax (Appeals) erred in deleting disallowance made by the Assessing Officer under section 40(a)(i) of the Act on account of non-deduction of TDS on the agency commission paid by the assessee to its non-resident agents. 2. The Assessing Officer while completing assessments for both these assessment years disallowed agency commission payments made to non-resident agents as the assessee did not deduct TDS under section 195 of the Act. The Assessing Officer invoking provisions of section 40(a)(i) of the Act disallowed such payments made by the assessee to non-resident agents. The Assessing Officer was of the view that since the Board has withdrawn Circular No.786 dated 7.2.2000 which deals with payment of export commi....
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....or A.Y. 2008-09) and M/s. Delta Shoes P Ltd (ITA No.909/Mds/2013 dated 31.07.2013). The facts involved in the cases of M/s. Farida Shoes P Ltd and M/s. Delta Shoes P Ltd, are exactly similar to those involved in the present assessee. In, the said cases (i.e. Farida Shoes P Ltd and Delta Shoes P Ltd) the payments made to the non-residents, without making TDS, were similar to those made by the present assessee company. The Assessing Officer disallowed the said payments u/s.40(a)(i) for non-deduction of TDS u/s.195 of the Act. The CIT(A) allowed the appeals of the said companies. The Revenue preferred an appeals to the ITAT against the orders of the CIT(A). The Hon'ble Income Tax Appellate Tribunal of Chennai, vide its orders mentioned abo....
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....supra), the Coordinate Bench of !TAT Chennai has considered the very same issue and observed that the commission paid to nonresident agent for the services rendered outside India and such payments are not chargeable to tax India and therefore, the provisions of section 195 are not applicable view of the decision of the Hon 'ble Supreme Court in the case of G E India Technology Centre P. Ltd. v. CIT (supra). 11. In the case of C!T v. EON Technology P) Ltd., the Hon'ble Delhi High Court has also held that the commission payment to its British parent/ holding company ETUK could not said to have been accrued to ETUK in India and therefore, the assessee was not liable to deduct tax at source from payment of commission to ETUK. The hea....
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....yes [In favour of assessee)." 12. The Hon'ble Delhi High Court has considered the decision of the Hon'ble Supreme Court in the case of M/s. Transmission Corporation of Andhra Pradesh reported in 239 ITR 587 and decided the issue in favour of the assessee. 13. In the case of Armayesh Global V. ACIT (supra), the Mumbai Bench of ITAT has observed that the commission payment was made to the overseas agent for procuring export orders. The agents have not been provided any managerial/technical services. The relationship between the assessee and the nonresident (agent) was only for rendering nontechnical services. Moreover, there was no permanent establishment of the said nonresident in India. Therefore, the commission paid to the no....
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.... to the assessee (Indian company), these services are rendered totally outside the country. In such a situation the payments (commissions) made to such agents are not liable to be taxed in India. TDS is required to be deducted on all payments to non-residents if the said payments are liable for tax in India. In the instant case, the commission payments to the non-resident agents are not taxable in India as the services are rendered abroad and the agents have no PE in India. Therefore, there is no requirement to deduct TDS on these payments. For this purpose' reliance is also placed on the decision of Apex court in the case of GE India Technology Cen. P Ltd. v. CIT [2010] (327 ITR 456) (SC), wherein it was held as under: * Section ....
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.... 2010-11) also the facts and circumstances are exactly identical to those involved in the case of M/s. Farida Shoes P.Ltd. for A.Y.2008-09 (except the type of product exported.) Therefore, since the issue involved in the present appeals is the same and the facts are exactly identical, the above decision of the !TAT, (M/s. Farida Shoes P Ltd, in ITA No.159 /Mds/20 13 dated 11.04.2013), is equally applicable to the facts of the present appeals of the instant assessee for A.Ys. 2009-10 and 2010-11 under consideration. Therefore, respectfully following the decision of !TAT, in the case of M/s. Farida Shoes p Ltd (in ITA No.159/Mds/2013 dated 11.04.2013), I hold that the above transactions of commission payments to the non-residents for procurin....