WHETHER TDS TO BE DEDUCTED ON COMMISSION PAID OUTSIDE INDIA WHEN AGENTS DO NOT HAVE PE IN INDIA?

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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YouTube video link for Hindi video:?https://www.youtube.com/watch?v=guSGmGkP_ao

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YouTube video link for English video:?https://www.youtube.com/watch?v=FaJyLDRxVoY

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YouTube shorts video link:?https://www.youtube.com/shorts/xHC2F_YUoXw

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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.

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