Court: ITAT, Mumbai
Citation: The Asst. Director of Income Tax (International Taxation) Vs. M/s. Wiz craft International Entertainment Pvt. Ltd.- (I.T.A.No. 3208/Mum/2003)
Brief: Commission paid to agents for services rendered outside India is not chargeable to tax in India and there is no obligation to deduct tax u/s 195. As Agent was not a performer, his income was not covered under Article 18 of the DTAA but was covered by Article 7 and as the services were rendered outside India and there was no PE, the same was not asses sable to tax in India.
O R D E R
PER N.V. VASUDEVAN, JM:
This is an appeal by the revenue against the order dated 17th January, 2003 of the Commissioner of Income-tax (Appeals)-XXXI, Mumbai.
2. In this appeal the revenue has projected its grievance against the order of the learned Commissioner of Income-tax (Appeals) whereby the CIT(A) held that there was no obligation on the part of the assessee to deduct tax at source on certain payments made by the assessee to non-residents.
3. The grounds of appeal taken by the revenue reads as follows:
“On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the payment to agent and reimbursement of expenses are not taxable without appreciating the fact that these are integral parts of payment to artists and the division is artificial.”
4.1 Wiz craft International Entertainment Pvt. Ltd. hereinafter referred to as ‘the appellant’ or “Wiz craft” is a Private Limited Company. It is engaged in the business of entertainment event management and marketing. It is mainly engaged in organizing corporate events, product launches, dealer meets, mega theme parties, concerts, pub promotions, exhibitions, entertainment extravaganzas, etc. It has organized the events/ performance of renowned foreign artists/groups in India.
4.2 For various events/performance of international artists in India, the Assessee entered into agreements with Colin Davie Artiste Services and Planet – 7, both were proprietary concerns of Mr. Colin Davie, having its registered office at P.O. Box 46, Skegness, Lincolnshire, U.K. PE24 5WA. Mr.Colin Davie is engaged in the business of acting as agent to and in coordination with several worldwide event management companies and provides artiste management services around the world. The appellant appointed Colin Davie as its agent –
a) To act on its behalf with limited authority, subject to approval by Wizcraft
b) To enter into a contract with the Artiste and
c) For other ancillary acts required from outside India to ensure that the artiste is able to perform in India.
4.3 For the various services rendered by the artistes in India, the Appellant paid remuneration. It also paid remuneration to Mr.Colin Davie for acting as agents in procuring the presence and performance of renowned artistes in India. The appellant also paid reimbursement of expenses in connection with the visit and performance of the artistes in India.
4.4. For various events/performance of international artists in India, the appellant deducted tax and paid to the credit of the Central Government on the fees paid to them. In all the cases, on the performance fees paid to the artists, the taxes were withheld as prescribed under the Act and paid to the Government. As already stated the Appellant deducted tax at source on payments made to artistes for performance in India but did not deduct tax at source on commission paid to Colin Davie who acted as agent between the appellant and the artiste who performed in India. According to the appellant in respect of the commission income of Colin Davie, the same is not taxable in India as Colin Davie had rendered services outside India for limited purpose of coordinating the engagement of the Artiste from outside India to perform the services on the dates of engagement. Similarly for reimbursement of expenses incurred in connection with the visit of the artiste for performance in India the Appellant made payments and in respect of such payments also the appellant did not deduct tax at source. According to the appellant as per the agreement with the artiste the Assessee agreed to reimburse the cost of travel of the artiste, out of pocket expenses while in India and expenses for transit of equipments used by Artiste and in respect of such reimbursement of expenses there is no element of income and therefore there is no obligation to deduct tax at source at the time of making payment.
4.5. The Assessing officer however treated commission payable and re-imbursement of expenses in the following cases as liable to tax and raised demand for the same.
Amount in US $
