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2013 (10) TMI 826 - AT - Income TaxTDS to be deducted u/s 195 of the Income tax act Applicability of section 201 and section 201(1A) of the act - Assessee is engaged in the business of processing of fruit products and exporting the same to the various non-resident customers in Saudi Arabia, Bahrain, Dubai, etc., through its non- resident agents - For the purpose of exports, the assessee had entered into an agency agreement with the non-resident agents to whom the commission was being paid as per the terms and conditions - The commission was being remitted to them in pursuance of the performance as per the said agreements - assessee had not deducted tax at source on the payments made to the non-residents as provided u/s 195 of the Act Held that:- Payment of market survey fees to a resident of UAE in the present case will fall under Article 7, i.e., 'business profit', in the absence of an article in the India-UAE treaty dealing with 'fees for technical services'. It is a settled principle that business profit of a resident of a contracting state is not chargeable to tax in the other contracting State unless the non-resident carried out the business through a PE in India. In the case on hand, revenue has not established that the non-resident has a PE in India. Hence in the absence of the PE in India, the business profit of the non-resident is not taxable in India. Even if it is considered that the payments made to non-resident will fall under Article 22 of the Treaty viz. "Other Income", then also the payments are not taxable to tax in India since as per Article 22, income of a resident shall be taxable only in that contracting State i.e., UAE and not in India. Payment made to the non-resident was not chargeable to tax in India and, therefore, there was no liability to deduct tax at source in respect of the said payment under section 195 of the Act Reliance has been placed on the various cases, one of case relied upon is Brakes India Ltd v. DCIT (LTU)[2013 (9) TMI 192 - ITAT CHENNAI] - Assessee's case doesn't fall within the ambit of s. 201 (1) of the Act for all the assessment years under consideration, the question of charging of interest u/s 201(1A) of the Act does not arise Decided in favor of Assessee.
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