Case Law Details
M/s. Evolv Clothing Company Pvt. Ltd. Vs ACIT (ITAT Chennai)
Conclusion: Payment of commission to overseas agents for marketing, procurement of orders and systematic market research was not liable to TDS as the same was not liable to tax in India as per Section 9(1)(vii).
Held: Assessee had paid commission to foreign agents for marketing, procurement of orders and systematic market research. AO opined that the income arising out of such payment was deemed to be taxable in India as per Section 9(1)(vii), hence provisions of Section 195 would be attracted and AO invoked the provisions of Section 40(a)(ia) for non-deduction of tax at source for the payment made to foreign agents. It was held AO had, in the assessment order, accepted that assessee had paid commission charges to overseas agents. It was not the case of AO that any lumpsum consideration had been made for any specific managerial, technical or consultancy services. On a overall reading of the Explanation, it was apparent that fees for technical services did not contemplate commission which was order specific and computable at a small percentage of the order value. Section 40(a)(i) did not contemplate order wise commission based on the order value.Therefore, payment of commission to non-resident who operated outside India did not attract tax liability as payment was remitted abroad directly and hence, no TDS was required.
FULL TEXT OF THE ITAT JUDGEMENT
These appeals by the assessee are directed against the common order passed by the learned Commissioner of Income Tax(Appeals)-6, Chennai, dated 10.04.2017 in ITA No.189 & 188/CIT(A)-6/2013-14 for the assessment years 2010-11 & 2011-12 passed U/s. 250(6) r.w.s. 143(3) of the Act.
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