WHETHER TDS TO BE DEDUCTED ON COMMISSION PAID OUTSIDE INDIA WHEN AGENTS DO NOT HAVE PE IN INDIA?
Respected Members
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Dive into jurisprudence, watch out today's income tax case law video to get a concise exploration of legal principles and their real-world applications.
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Short note of today's case law for quick reference:
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[2024] 111 ITR (Trib) (S.N.) 7 (Mum)
[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — MUMBAI "C" BENCH]
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DEPUTY COMMISSIONER OF INCOME-TAX
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CREATIONS BY SHANAGAR
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1. The assessee manufactured and exported embroidered fabrics and allied products.
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2. The assessee received export orders from agents stationed outside India, exported its products, and for the services of the agents, the assessee paid them commission.
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3. For the A.Y. 16-17 commission paid to 4 agents without deduction of TDS of Rs. 1.61 crores.
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4. A.O. disallowed commission payments paid to the non-resident, since no tax was deducted thereon.
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5. CIT(A) deleted the addition relying on the decision of the Tribunal in the assessee’s own case.
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6. On appeal Tribunal held that:
There was no dispute that the services for which commission was paid by the assessee were rendered by non-resident agents outside India for procuring export orders from customers outside India.
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7. The payments were made outside India and the non-residents did not have any geographical or permanent establishment in India.
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8. DTAA existed with the countries of residents of the non-resident Italy, France, Greece and Lebanon.
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9. The assessee fixed the percentage of commission to the agent at FOB Value of the invoice and foreign currency after the full payment was received from the foreign customers.
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10. The order of commissioner appeals was upheld.