TaxTMI 
TaxTMI 
2026 (1) TMI 926
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....d its return of income for the assessment year 2020-21, declaring income of Rs. 45,99,37,860/- on 29.10.2020. Case of the assessee was selected for scrutiny. Accordingly, notices u/s. 143(2) and 142(1) of the Act were issued and served on the assessee. After considering the submissions of the assessee, the Assessing Officer made several additions, including disallowance of commission paid, but tax not deducted to the extent of Rs. 1,85,6,973/-. 3. Aggrieved, assessee preferred an appeal before learned CIT(A), Gurgaon. Learned CIT(A) partly allowed the appeal preferred by assessee on another issue and dismissed the issue of commission paid to non-resident without TDS deduction. 4. Aggrieved with the above order, assessee is in this app....
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....ned DR relied on the findings of lower authorities. 7. Considered the rival submissions and the material placed on record. 8. We observe that the assessee has paid oasis commission to B & G Export Corporation PTY Ltd. and Red Coral Business Consultants to procure the orders for the assessee for export of meat. These parties procured the orders for assessee outside India and it is clear that the services are rendered outside India. These parties do not have any PE in India. Therefore, as held in Transmission Corporation of A.P. Ltd. and Another v. Commissioner of Income Tax (1999) 239 ITR 587 (SC), that the income, which is not chargeable to tax in India, the assessee is not required to deduct TDS. Further, in the case of Harbalife Int....
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....e Supreme Court noted that treaty negotiations are largely a bargaining process with each side seeking concessions from the other, the final agreement will often represent a number of compromises, and it may be uncertain as to whether a full and sufficient quid pro quo is obtained by both sides. The Court acknowledged that developing countries allow 'treaty shopping' to encourage capital and technology inflows which developed countries are keen to provide to them. It was further noted that the corresponding loss of tax revenues could be insignificant compared to the other nontax benefits to the economies of developing countries which need foreign investment. The Court felt that this was a matter best left to the discretion of the ex....
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....ent and does not deduct TDS and therefore in whose case there would be no disallowance of the payment as deduction because TDS was not deducted. Therefore, the consequence of non-deduction of TDS when the payment is to a non-resident has an adverse consequence to the payer. Since it is mandatory in terms of Section 40 (a) (i) for the payer to deduct TDS from the payment to the non-resident, the latter receives the payment net of TDS. The object of Article 26 (3) DTAA was to ensure non-discrimination in the condition of deductibility of the payment in the hands of the payer where the payee is either a resident or a non-resident. That object would get defeated as a result of the discrimination brought about qua non-resident by requiring the T....
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....0 is specifically intended to enable and empower the Central Government to issue a notification for implementation of the terms of a double taxation avoidance agreement. When that happens, the provisions of such an agreement, with respect to cases to which where they apply, would operate even if inconsistent with the provisions of the Income Tax Act. We approve of the reasoning in the decisions which we have noticed. If it was not the intention of the Legislature to make a departure from the general principle of chargeability to tax under Section 4 and the general principle of ascertainment of total income under Section 5 of the Act, then there was no purpose in making those sections subject to the provisions of the Act. The very object of ....