The Tax Publishers2020 TaxPub(DT) 3342 (Del-Trib) : (2021) 186 ITD 0459

INCOME TAX ACT, 1961

Section 195

Payment made towards procurement of export orders by non-resident could not be considered as fees for technical services (FTS) when there was not an iota of evidence to prove that non-resident was having any managerial or technical expertise to provide technical services to assessee-company, apart from procuring orders for assessee-company on commission basis as per concerned MoU and since recepient was not having PE in India. Commission from assessee-company was not chargeable to tax in India as same was neither accrued in India nor was received in India and as such assessee was not required to deduct tax at source under section 195.

Tax deduction at source - Under section 195 - Payment made towards procurement of export orders by non-resident -

Assessee-company being into export business availed of services of TEI, Japan for procuring order for supplying, installing and successful commissioning of cold rolling mill (turnkey project) to a Kenyan company and paid commission @ 6%. Revenue held commission payment to be in the nature of fees for technical services and accordingly, disallowed deduction for want of TDS under section 195. Held: There was not an iota of evidence on record if TEI was having any managerial or technical expertise to provide technical services to assessee-company, apart from procuring orders for assessee-company on commission basis as per concerned MoU. Even TEI was not having any Permanent Establishment (PE) in India income of TEI received as commission from assessee-company was not chargeable to tax in India as same was neither accrued in India nor was received in India and as such assessee was not required to deduct tax at source under section 195. Accordingly, disallowance made by AO merely on the basis of conjectures and surmises could not be sustained.

Relied:Adidas Sourcing Ltd. v. ADIT (International Taxation) (2013) 150 TTJ 801 (Del) : 2013 TaxPub(DT) 303 (Del-Trib), CIT v. Model Exims (2014) 363 ITR 66 (All) : 2014 TaxPub(DT) 1523 (All-HC), DIT (International Taxation) v. Panalfa Autolektrik Ltd. (2014) 49 Taxmann.com 412 (Del) : 2014 TaxPub(DT) 4334 (Del-HC) and GVK Industries Ltd. & Anr. v. TPO & Anr. (2015) 371 ITR 453 (Sc) : 2015 TaxPub(DT) 605 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

IN THE ITAT, DELHI BENCH

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