Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 1959 - AT - Income TaxTDS u/s 195 - Disallowance u/s. 40(a)(i) - TDS was not made on the commission paid to foreign entity for the services rendered abroad - DTAA between India and USA - HELD THAT:- Provisions of Section 195 would not be applicable to the commission payments made by assessee to non-resident agent who has not done any service in India and as such income is not chargeable to tax under the provisions of the Act as there is no requirement to do any TDS u/s. 195, the disallowance made u/s. 40(a)(i) is also not survive. CIT(A) without understanding the international law has simply held that a foreign agent and the Indian company are sister concerns and accordingly the amounts are taxable. Even if one were to consider that other company is a sister concern of assessee, how the provisions of Section 195 or Section 5 and Section 9 are applicable has not been discussed by CIT(A) at all. The provisions of DTAA between India and USA also gives the right to tax the amount in the hands of foreign assessee if the same is considered as business income when there is no permanent establishment in India. Since the non- resident has no permanent establishment in India, the question of taxing the amount does not arise as the provisions of DTAA which over rides the provisions of Income Tax Act. In view of that, the order of CIT(A) cannot be upheld. Similar view was also expressed by the Co-ordinate Bench in the case of Dy.CIT Vs. M/s. Linkwell Telesystems (P.) Ltd. [2014 (1) TMI 1863 - ITAT HYDERABAD] wherein also commission was paid to non-residents for the services rendered abroad and was held not taxable. In view of that, we cannot uphold the orders of AO disallowing the amount u/s. 40(a)(i). - Decided in favour of assessee.
|