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| The Tax Publishers2020 TaxPub(DT) 0756 (Del-Trib) INCOME TAX ACT, 1961
Section 40(a)(i)
Since services of foreign agents were rendered outside India and commission for the same was also made outside India, such payment of commission would not come under the purview of section 195 and hence, the disallowance made under section 40(a)(i) for non-deduction of tax at source on the said commission payment, would not be sustainable.
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Business disallowance under section 40(a)(i) - Payment to non-resident without TDS - Commission paid to foreign agents -
AO noticed that assessee did not deduct any tax at source on commission paid to foreign agents. Assessee explained that the foreign agents, to whom the commission was paid, were not located in India and the services were rendered outside India. AO, however, did not agree with the contention of the assessee and opined that the services provided by the non-resident foreign agent or being utilised in India and clearly taxable under section 9(1)(i) and 9(1)(vi)(b) and therefore, the non-deduction of TDS was covered by section 195. Accordingly, he made addition under section 40(a)(i). Held: It was not in dispute that services of foreign agents were rendered outside India and sales and commission for the same was also made outside India, therefore, such payment of commission would not come under the purview of section 195 and hence, the disallowance made under section 40(a)(i) for non-deduction of tax at source on the said commission payment, would not be sustainable.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 251
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