Case Law Details
Vimta Labs Limited Vs DCIT (ITAT Hyderabad)
Under the provisions of section 195 of the Act, any person responsible for making a payment to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of the Act, shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by other mode, whichever is earlier, deduct income tax thereon at the rates in force. The assessee was therefore, asked to show-cause as to why there was no deduction of tax at source while making the payment to the N.R agents. The assessee submitted that it has paid agreed commission amount to the agents in foreign currency from India through normal banking channels viz., wire transfer, RTGS, DD/ Cheques etc., and that the agents were non-residents and since they were not having any PE in India and rendered the services outside India and the commission paid to them being their business income is not taxable in India under the provisions of section 9 of the IT Act, 1961. Therefore, there was no requirement to deduct tax u/s 195 of the Act
ITAT held that the business receipts of the foreign residents are not taxable in India since the agents have no PE in India and therefore, the assessee was not required to make TDS u/s 195 of the Act. Therefore, the assessee’s appeals for all the three A.Ys are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
The appeals in ITA Nos. 11 & 12/Hyd/2017 are filed by the assessee against the orders of the CIT(A)-5, Hyderabad, dated 31/10/2016 for the assessment years 2012-13 and 2013-14 while ITA No.1273/Hyd/2017 is against the order of the CIT(A)-5, Hyderabad dated 20/06/2017 for the assessment year 2014-15. As the issue involved in all these appeals is common, all the three appeals were heard together and are disposed of by this common and consolidated order.
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