Kloeckner Desma Machinery Private Limited Vs DCIT (ITAT Ahmedabad)
Export Commission Paid to Non-Resident Agents Not Taxable in India — No TDS Required; Disallowance Deleted (A.Y. 2017-18)
The Ahmedabad Bench of the ITAT allowed the assessee’s appeal and deleted the disallowance of export commission paid to non-resident agents for A.Y. 2017-18. The AO had disallowed 30% of commission for non-deduction of TDS by invoking Section 40(a)(ia) (erroneously, instead of Section 40(a)(i)) on payments to foreign agents.
The Tribunal held that:
- The non-resident agents rendered services entirely outside India and had no permanent establishment in India; hence, their commission income did not accrue or arise in India under Section 9(1)(i).
- Consequently, Section 195 was not attracted, and no TDS was required.
- The issue was squarely covered in the assessee’s favour by consistent appellate history in earlier years (including ITAT, DRP, and CIT(A) orders on identical facts), which the CIT(A) failed to follow.
- Reliance on CIT v. Toshoku Ltd. (SC) was reaffirmed, distinguishing contrary AAR rulings relied upon by the AO.
Accordingly, the ITAT directed deletion of the disallowance and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), ADDL/JCIT (A)-6, Kolkata (hereinafter referred to as “CIT(A)”), dated 08.01.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2017-18.
