Jupiter Comtex Pvt. Ltd. Vs ACIT (ITAT Ahmedabad)
Foreign commission paid to non-resident agents for procuring export orders—services rendered entirely outside India—no PE or business operations in India—income not chargeable to tax in India—no TDS liability under section 195—disallowance under section 40(a)(i) deleted.
Summary: The appeal was filed by the assessee against the order of the Ld. CIT(A), NFAC, Delhi dated 07.04.2026 for AY 2012-13, concerning disallowance of Rs. 9,66,471/- under Section 40(a)(i) of the Income-tax Act, 1961 for alleged non-deduction of tax at source on commission paid to non-resident agents. The assessee contended that the foreign agents rendered services outside India, had no permanent establishment or place of business in India, and that agreements, invoices and other documentary evidence had been furnished. The CIT(A) held that the commission was chargeable to tax in India under Sections 5(2) and 9(1)(i), principally because the commission became payable upon execution of export orders in India, and accordingly upheld the disallowance. The ITAT considered the decisions of the Hon’ble Supreme Court in CIT v. Toshoku Ltd., 125 ITR 525 (SC), and GE India Technology Centre Pvt. Ltd. v. CIT, 327 ITR 456 (SC), and found that the Revenue had not established that the non-resident agents rendered services in India or had any permanent establishment or business operations in India. Following the stated decisions of the Supreme Court and the jurisdictional Gujarat High Court, the Tribunal held that the commission paid for services rendered outside India was not chargeable to tax in India, the assessee was not liable to deduct tax under Section 195, and no disallowance under Section 40(a)(i) was warranted. The disallowance of Rs.9,66,471/- was deleted and Grounds No. 1 to 6 were allowed. Ground No. 7 was treated as general, and the appeal was allowed.
