DCIT Vs Allsec Technologies Limited (ITAT Chennai)
ITAT Chennai held that payments are in the nature of selling commission to foreign agents who is not having permanent establishment (PE) or business connection in India is not taxable in India and accordingly, TDS u/s. 195 not deductible.
Facts- The assessee paid selling commission of Rs.197.18 Lacs and deducted TDS on payment of Rs.99.55 Lacs but did not deduct TDS on the remaining amount on the ground that the recipient did not have any business connection or PE in India and therefore, not covered by however, AO referred to Explanation to Sec. 9 as introduced by Finance Act, 2010 w.r.e.f. 01-04-1976 to make this disallowance. AO also referred to CBDT Circular No.7/2009 dated 22-10-2009. AO also referred to Explaantion-2 to Sec. 195(1) as inserted with retrospective effect from 01-04-1062 by Finance Act 2012. Finally, the amount of Rs.97.62 Lacs was disallowed u/s 40(a)(i) for want of TDS on these payments.
The impugned disallowance was deleted by CIT(A) against which the revenue has preferred the present appeal.
Conclusion- Faizan Shoes Pvt. Ltd. (48 Taxmann.com 48), it was held that where foreign agents had no PE in India, no part of their services would be rendered in India and therefore, there would be no obligation to deduct TDS u/s 195.
