No TDS on Overseas Commission; Section 40(a)(i) Disallowance Deleted, Revenue Appeal Dismissed

ACIT Vs Jagson Colorchem Limited (ITAT Ahmedabad) The ITAT, Ahmedabad Bench held that commission paid to foreign agents for services rendered entirely outside India is not chargeable to tax in India, and therefore no obligation to deduct TDS u/s 195 arises. Consequently, disallowance u/s 40(a)(i) is unsustainable. In this case (AY 2018-19), the AO disallowed ₹5.63 crore being commission paid to overseas agents, purely on the ground of non-deduction of TDS, without examining whether such income was chargeable to tax in India. The CIT(A) deleted the disallowance, and the Revenue appealed. The ...