INCOME TAX ACT, 1961

Section 41(a)(ia)

Business deduction under section 40(a)(ia) - Payment to non-resident - Assessee failed to establish that payments in respect of sales commission were made to foreign parties for the services rendered outside India -

AO was of the view that assessee-company was liable to deduct tax at source on gross sales commission paid to foreign parties/ non-residents. Since the assessee did not deduct tax at source on such commission; the same was disallowed by the AO. Assessee submitted that the tax need not be deducted at source against the payments made to foreign parties/ non-residents as commission agents. Held: Despite providing sufficient opportunity, the assessee failed to furnish any evidence to establish that payments in respect of sales commission were made to foreign parties for the services rendered outside India. Further, the terms and conditions of such payments were only explained without establishing the fact that the payment had been made for services rendered outside India. Therefore, the AO was justified in disallowing such sales commission for non-deduction of tax under section 195.

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2009-10

SUBSCRIBE FOR FULL CONTENT