2014 (7) TMI 761 - ITAT CHENNAI - Income Tax

Head Note / Extract:
Non-deduction of TDS on overseas payment of agency commission – Disallowance u/s 40(a)(ia) of the Act – Held that:- Assessee is availing the services of non-resident agents for procuring export orders for which commission is paid - nonresident agents have no business connection nor they have any permanent establishment (PE) in India - non-resident agents are procuring orders for the assessee and are thus operating outside the Indian territory – The decision in Assistant Commissioner of Income-tax, Company Circle- II(1) Versus Farida Shoes (P.) Ltd. [2013 (11) TMI 907 - ITAT CHENNAI] - payments to non-residents for procuring export orders are not assessable to tax in India – also in GE Technology Cen. P. Ltd., Vs. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] it has been held that if any sum is paid to the non-resident which is not chargeable to tax under the Act, the assessee is under no obligation to deduct tax at source u/s.195 in respect of payments - The obligation to deduct tax at source arises only where the sum is chargeable to tax in India – thus, there was no infirmity in the order passed by CIT(A) – Decided against Revenue.