DCIT v. Shamrock Pharmachemi (P) Ltd.

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The Tax Publishers2020 TaxPub(DT) 4863 (Mum-Trib)

INCOME TAX ACT, 1961

Section 195

Non-resident agents to whom commission was paid by assessee, had rendered services outside India for sale of goods of the assessee outside India, also, non-resident agents did not have any PE in India and they were domiciled in UK and USA. In view of this, there was no income chargeable to tax in India in terms of section 195(1) in the hands of the non-resident agents and further, services rendered by the non-resident agents were service for completion of export commitment and did not fall within the definition of 'fees for technical services' and, therefore, no TDS was called for under section 195.

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

Assessee paid export commission to overseas agents, who arranged for exports and procured export orders for assessee. AO disallowed deduction of commission paid for want of TDS under section 195. Held: Non-resident agents to whom commission was paid by assessee, had rendered services outside India for sale of goods of the assessee outside India. It was not in dispute that said non-resident agents did not have any PE in India and they were domiciled in UK and USA. In view of these facts, it could be safely concluded that there was no income chargeable to tax in India in terms of section 195(1) in the hands of the non-resident agents and further, services rendered by the non-resident agents could, at best, be called as a service for completion of export commitment and did not fall within the definition of 'fees for technical services' and, therefore, no TDS was called for under section 195.

Followed:GE India Technology Center Pvt. Ltd. v. CIT (2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14 & 2014-15

INCOME TAX ACT, 1961

Section 14A