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The Tax Publishers Payment of Overseas agency commission disallowance for non-deduction of TDS *Facts:* Assessee had to pay Rs. 1.54 crores as overseas agency commission to two non-resident India (residents of Australia) to earn its info. tech revenues from Tech Mahindra Australia for Rs. 2.32 crores with his entire revenue was Rs. 2.75 crores. In quantum the commission paid was 66% of the relative revenues earned. AO on obtaining adverse report through survey under Section 133(6) from Tech Mahindra disallowed the said spend of Rs. 1.54 citing no TDS was done and the assessee has not established the need to pay this much as offshore commission. On appeal CIT(A) allowed the expense citing that there is no requirement to withhold taxes on offshore agency commission and in the absence of a PE the commission income earned also cannot be attributed to India. Aggrieved revenue went in appeal to ITAT - Held against the revenue that the disallowance was uncalled for. It is not for the revenue to decide what is a right quantum or otherwise as long as the expenditure its need has been manifested for business the same is allowable. *Applied:* i) ACIT v. Kapoor Industries Ltd. (2021) 187 ITD 603 (Delhi-Trib.) ii) Apurva Goswami v. Dy. DIT (Int. Taxation) (2022) 196 ITD 10 (Delhi Trib) iii) Pr. CIT v. Puma Sports India (P.) Ltd. (2021) 434 ITR 69 (Kar) : 2021 TaxPub(DT) 1868 (Karn-HC) SLP filed by the Department stands dismissed as reported in (2022) 285 Taxman 191 (SC). *Ed. Note:* The decision looks as a one off as if one were to look at paying this much quantum as commission then the first question one might need to ask is are these people agents or full time employees being paid in the guise of agency commission. What services were done by these agents is not discussed in detail in the verdict unfortunately which was well within the powers of the CIT(A) and the AO as well. *Case:* ACIT v. Manoj Raizada 2023 TaxPub(DT) 4434 (Del-Trib)

The Tax Publishers

Payment of Overseas agency commission disallowance for non-deduction of TDS

Facts:

Assessee had to pay Rs. 1.54 crores as overseas agency commission to two non-resident India (residents of Australia) to earn its info. tech revenues from Tech Mahindra Australia for Rs. 2.32 crores with his entire revenue was Rs. 2.75 crores. In quantum the commission paid was 66% of the relative revenues earned. AO on obtaining adverse report through survey under Section 133(6) from Tech Mahindra disallowed the said spend of Rs. 1.54 citing no TDS was done and the assessee has not established the need to pay this much as offshore commission. On appeal CIT(A) allowed the expense citing that there is no requirement to withhold taxes on offshore agency commission and in the absence of a PE the commission income earned also cannot be attributed to India. Aggrieved revenue went in appeal to ITAT -

Held against the revenue that the disallowance was uncalled for. It is not for the revenue to decide what is a right quantum or otherwise as long as the expenditure its need has been manifested for business the same is allowable.

Applied:

i) ACIT v. Kapoor Industries Ltd. (2021) 187 ITD 603 (Delhi-Trib.)

ii) Apurva Goswami v. Dy. DIT (Int. Taxation) (2022) 196 ITD 10 (Delhi Trib)

iii) Pr. CIT v. Puma Sports India (P.) Ltd. (2021) 434 ITR 69 (Kar) : 2021 TaxPub(DT) 1868 (Karn-HC) SLP filed by the Department stands dismissed as reported in (2022) 285 Taxman 191 (SC).

Ed. Note: The decision looks as a one off as if one were to look at paying this much quantum as commission then the first question one might need to ask is are these people agents or full time employees being paid in the guise of agency commission. What services were done by these agents is not discussed in detail in the verdict unfortunately which was well within the powers of the CIT(A) and the AO as well.

Case: ACIT v. Manoj Raizada 2023 TaxPub(DT) 4434 (Del-Trib)