Brief of the case:
ITAT Lucknow in the case of ACIT vs. M/s Northern Tannery held that The commission paid to the non- resident agent for procuring order and recovering payments on the behalf of assessee could not be treated as the payment made for availing technical services as the services rendered by the agent not required any specialized skill set or expertise to execute the tasks. Thus, the aforesaid services are not technical services as defined u/s 9(1)(vii) and consequently not liable for tax deduction u/s 195.
Facts of the case:
- The assessee firm made a payment of commission to non-resident agent procuring orders for the assessee from the foreign country. The AO made an addition of commission amount Rs 24,84,645/- by contending that the assessee failed to deduct tax at source which was required as the commission was nothing but fees for rendering technical services.
- The additions made by the assessee was deleted by the CIT(A) on the ground that commission paid for arranging of export sales and realization of sale proceeds cannot be regarded as consultancy service because in providing such service the service provider (non-resident agent) has not used any specialized skill or knowledge. Aggrieved by the same, revenue is now in appeal before the ITAT.
Contention of the Revenue:
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