TaxTMI 
TaxTMI 
2017 (2) TMI 115
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....d u/s. 195 of the Act. The non-resident did not have any business connection or dependent agent in India and the amount paid was not through or from any property, asset or source of income in India. As such, the amount paid is not income which is chargeable under the provisions of the Act and hence, no tax was deductible therefrom. 2.4.7 I am fortified in the above view by the decision of the Hon'ble ITAT in the case of Armayesh Global vs. ACIT, (2011) 45 SOT 69 (Mum) (URO) dated 23-02-2011 where it has been held as under: "The overseas agent did not render any services in India. It had no place or permanent establishment in India. It worked abroad and procured orders. The* orders were sent directly by the foreign purchasers remitted to the assessee in India and even the payment for export was received by the assessee in foreign currency directly from foreign purchasers and the commission was paid to foreign agent thereafter as a percentage of sales in terms of the agency agreement. The payment made to overseas commission agent by the assessee was not for technical/managerial services. Therefore, in the absence of any service having been rendered in India, no part of the co....
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....n India and hence, existence of service PE in India would not make it taxable under Article 7 of Indo-US DTAA. 2.4.12 It is undisputed that the payments which have been made to the nonresidents were in respect of export commission. Further, these non-residents do not have any Permanent Establishment in India. As the services were rendered in respect of procurement of export orders outside India, the appellant was not obliged to deduct any tax on the commission so paid. 2.4.13 Similarly, in a recent decision in the case of Gujarat Reclaim & Rubber Products vs. ACIT, (2013) 35 taxmann.com 587 (Mum-Trib) vide their order dated 19-04-2013, Hon'ble ITAT Mumbai Bench has held as under: "Section 9, read with section 40(a)(i) and 195 of the I. T.Act, 1961 Income - Deemed to accrue or arise in India (Commission) Assessment years 2007-08 to 2008-09 - Whether where assessee paid commission to non-resident agent outside India for services provided in foreign countries, in absence of PE of non-resident agent in India said payment would not be chargeable to' tax in India hence, no disallowance u/s. 40(a)(i) can be made - Held, yes [Para 4.6J [In favour of assessee]." 2.4.14 Earli....
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....e of Toshoku Ltd. and held that where the foreign agent is merely canvassing orders outside India and no service is rendered by it within the taxable territory, the amount of sales commission was not liable to tax in India. The foreign agent does not have any Business Connection in India and hence his income is not deemed to accrue or arise in India. 2.4.22 In the case of Ind Telesofi Pvt. Ltd (2004) 267 ITR 725, the Authority for Advance Rulings held that commission and retainer fees received by non resident agent from Indian exporters is not taxable in India. In the said case, assessee was engaged in the business of providing software solutions for telecom industry. It entered into agreement with three non- residents from three different countries viz . France, Canada and USA, for securing business from outside India. The assessee agreed to pay retainer fees and commission to non resident agents. In absence of the non resident agents having any Business Connection in India, it was held that the income of the non residents was not taxable in India. 2.4.23 ITAT in Allied Nippon Limited (Oel-Trib) the facts were that the export commission was paid to the non-resident who rendere....
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....der: "In this case, the assessment order U/s. 143(3) of the I. T. Act, 1961 had been passed on 30.12.2011 after determining total income at Rs. 2,43,86,380/-. During the assessment proceeding The A. O. while assessing the income at Rs. 2,43,86,380/- disallowed Rs. 7,71,555/loss on account of sundry creditors. The AO has added Rs. 1,01,42,806/- for payment to the non-resident without deducting of the TDS, 1,06,908/- for payment of legal and professional to Mr. Vishal J. Kapoor without deducting the TDS and Rs. 34,775/- on account of patty cash expense. During the assessment proceedings, the assessee vide order sheet dtd. 21. 11.2011 was asked to provide details of foreign exchange losses claimed. The AR appeared on 31.12.2011 and submitted the details. However, the AR failed to furnish the supportive details regarding foreign exchange loss on account of sundry creditors. As per direction given in the letter referred above, the assessee vide letter dated 22.07.2013 was given an opportunity to be heard and submit the relevant details documents supporting his claim. In response to the said letter, the assessee has not submitted any new details. On going through the details submitt....