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2021 (2) TMI 726 - AT - Income TaxTDS u/s 195 - disallowance u/s 40(a)(i) on account of non-deduction of tax at source while paying sales commission to non-residents - as held by the AO that the payment of commission by the assessee to non-resident agents is fee for technical services and hence the assessee was required to deduct tax at source - HELD THAT:- Commission has been paid to various non-resident entities in respect of sales affected by the assessee outside of India, the services have been rendered by these entities outside of India and the payments have been made outside of India. In light of these undisputed facts, the legal proposition laid down in the aforesaid decision equally applies in the instant case and commission paid to non-resident outside India for the services rendered outside India will not fall in the category of the income received or deemed to be received in India as well as accrues or arises or is deemed to accrue or arise in India. Such commission payment or part thereof cannot therefore be held chargeable to tax in India and in absence of any income chargeable to tax, there was no liability to deduct tax at source u/s 195(1) and the provisions of section 40(a)(i) therefore cannot be invoked in the instant case. Further, out of total commission payment of ₹ 99,84,436, an amount of ₹ 1,55,867/- has been paid to a resident entity on which TDS has already been done which is again out of the ambit of provisions of section 40(a)(i) of the Act. In light of above discussions and considering the entirety of facts and circumstances of the case, the disallowance made by the Assessing officer by invoking provisions of section 40(a)(i) is hereby directed to be deleted. Appeals filed by the assessee are allowed.
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