INCOME TAX ACT, 1961

Sections 9(1)(i), 195

Tax deduction at source - Under section 195 - Payments to non-residents general commission agent -

Assessee, a firm engaged in trading activity of yellow peas, grains, etc. filed form No. 15CA regarding remittance of various payments to non-residents. AO raised tax demand under section 195 read with section 201(1) in respect of payments made by assessee to PKT Associates Inc. USA & AST Enterprise Inc., UAE for import of commodities by treating M/s Ashapura Commodities and M/s A.G. Goel & Sons as their respective business connections in India in terms of section 9(1)(i). Assessee filed letters dated 31-7-2014 in which it was stated by PKT Associates Inc., USA that it did not have any regular agent in India and was exporting through brokers who were general commission agents having independent stafus. Similarly, other parties also stated that they had independent status. Held: Under section 9(1)(i), broker general commission agent or an agent of an independent status is excluded, if it is found that such broker, general commission agent or any other agent works mainly or wholly on behalf of a non-resident. The agent may be main client, but law mandates that non-resident should be the main client of agent. As evident, agent was working mainly or wholly on behalf of non-resident because more that 50% of commission receipt was received from nonresident. Thus, agent was mainly working for the non-resident. Moreover, assessee had furnished various documents to demonstrate that agent was a general commission agent. Therefore, assessee had no liability for deduction to tax.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : A.Y. 2015-16

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