Case Law Details
M/s. Divya Creations Vs The ACIT (ITAT Delhi)
The issue under consideration is whether the TDS will be applicable on payment of Foreign Agency Commission?
In the present case, the A.O. on perusal of Schedule-18 of of Selling Expenses noticed that assessee had debited expenses in the name of commission to non-resident other than a company or a foreign company. The A.O. took-up the issue of TDS made on such payments to non-resident agents in the assessment year under appeal and examined the claim of assessee. The A.O. also noted that similar disallowance were made under section 40(a)(i) of the I.T. Act and considering the fact that the expenses made in foreign agency commission are of the same nature as last year and no TDS has been deducted by the assessee, therefore, the amount in question was disallowed under section 40(a)(i) of the I.T. Act.
ITAT states that the agent had their base situated in Abroad and moreover services were also rendered by them outside. Therefore, assessee is not required to deduct tax at source while making payments in question. The A.O. in the assessment order has also made disallowance since in earlier year also of the same issue and no TDS have been deducted. Therefore, the facts being identical, no disallowance is required in the matter. ITAT, therefore, following the Order of the Tribunal in the case of assessee for the earlier year, set aside the Orders of the authorities below and delete the addition.
Therefore, the appeal of Assessee allowed.
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