The Tax Publishers2020 TaxPub(DT) 4752 (Del-Trib)

INCOME TAX ACT, 1961

Section 195

Where the services rendered by the non-resident agent could at best be called as a service for completion of the export commitment and would not fall within the definition of 'fees for technical services' therefore, section 9 would not be applicable and, consequently, section 195 would not come into play.

Tax deduction at source - Under section 195 - Payment to non-resident for completion of export commitment -

Assessee was in appeal against the order of AO making disallowance of payment made to non-resident on account of agency commission on the premise that it was subject to the requirement of tax withholding under section 195 as it comes within the preview of fees for technical services. Held: As decided in assessee's own case (2018 TaxPub(DT) 4133 (Del-Trib) wherein relying Welspun Corporation Limited and Vice-Versa[(2017) 77 Taxmann.com 165 (Ahd) : 2017 TaxPub(DT) 1184 (Ahd-Trib)] it was held that on payments made by assessee for services rendered by non-resident agents could not be held to be fees for payment for technical services, these payments were in nature of commission earned from services rendered outside India which had no tax implications in India. In case of CIT v. Kikani Exports (P) Ltd. (2014) 369 ITR 96 (Mad-HC) : 2015 TaxPub(DT) 431 (Mad-HC) it was also held that the services rendered by the non-resident agent could at best be called as a service for completion of the export commitment and would not fall within the definition of 'fees for technical services' and, therefore, section 9 was not applicable and, consequently, section 195 did not come into play. Thus, following the, said legal positions, disallowance made by AO was deleted.

Followed:Dy. CIT, Circle 9 (1) v. Sterling Ornament (P) Ltd. 2018 TaxPub(DT) 4133 (Del-Trib), Welspun Corporation Limited and Vice-Versa (2017) 77 Taxmann.com 165 (Ahd) : 2017 TaxPub(DT) 1184 (Ahd-Trib) and CIT v. Kikani Exports (P) Ltd. ((2014) 369 ITR 96 (Mad) : 2015 TaxPub(DT) 0431 (Mad-HC)

REFERRED :

FAVOUR : In favour of assessee.

A.Y. : 2016-17



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