INCOME TAX ACT, 1961

Section 195

Tax deduction at source - Under section 195 - Payment of commission to foreign agents -

Revenue challenged order of Tribunal in deciding addition towards payment of commission to foreign agents where TDS was not deducted under section 40(a)(ia) ignoring the decision of AAR in the case of Rajiv Malhotra, In re (2006) 284 ITR 564 (AAR) : 2006 TaxPub(DT) 1721 (AAR) and SKF Boilers and Driers Pvt. Ltd.Held: The matter is entirely covered by the decision of the Hon'ble Apex Court in the case of GE India Technology Centre (P) v. CIT, [(2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC)] In this decision, Apex Court has held that the duty to deduct tax at source arises only when remittance is made to non-residents contain wholly or partly taxable income, i.e., income chargeable under section 195 of the Income Tax Act, 1961. The view taken in GE India Technology (P) Limited (supra) was once again reiterated in another decision of the Hon'ble Apex Court in the case of C.I.T. v. Toshoku Ltd. (1980) 125 ITR 525 (SC) : 1980 TaxPub(DT) 1127 (SC).

Followed:GE India Technology Centre (P) v. CIT, [(2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC)]; C.I.T. v. Toshoku Ltd. (1980) 125 ITR 525 (SC) : 1980 TaxPub(DT) 1127 (SC)Distinguished:Rajiv Malhotra, In re (2006) 284 ITR 564 (AAR) : 2006 TaxPub(DT) 1721 (AAR); SKF Boilers and Driers Pvt. Ltd.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 37(1)

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