DCIT Vs M/s. Gujarat Microwax Pvt. Ltd. (ITAT Ahmedabad)
ITAT held that the Commission income in the hands of foreign agent is not chargeable to tax in India in the given facts & circumstances and Once an income is not chargeable to tax in India then the question of deducting TDS under the provision of section 195 of the Act does not arise.
FULL TEXT OF THE ITAT JUDGMENT
The captioned appeal has been filed at the instance of the Revenue against the appellate order of the Commissioner of Income Tax(Appeals)-2, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-2/424/DC.Cir.2(1)(1)/2015-16 dated 14/07/2016 arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) dated 18/03/2016 relevant to Assessment Year (AY) 2013-14.
2. The Revenue has raised the following grounds of appeal :
“1. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance made by the AO on account of export commission of Rs.54,06,265/- paid to overseas agents u/s. 40(a)(i) of the Act without properly appreciating the facts of the case and the material brought on record.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.
3. It is, therefore, prayed that the order of the Ld.CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent.”
3. The only issue raised by the Revenue is that Ld. CIT(A) erred in deleting the disallowance made by the AO on account of non-deduction of TDS u/s 195 r.w.s 40(a)(i) of the Act.
4. Briefly stated facts are that the assessee in the present case is a Private Ltd. Company and engaged in the manufacturing business of Microcrystalline Cellulose Powder, Crosscarmellose Sodium, Sodium Starch Glycolate, Dl Calcium Phosphate etc.
5. The assessee, in the year under consideration has claimed commission expenses of Rs.54,06,265/- for the services rendered by the foreign commission agents in connection with its business. The details of the parties, commission amount and volume of the business referred by the commission agents are reproduced as under:
