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2016 (6) TMI 260 - AT - Income TaxTDS u/s 195 - commission income earned by non-resident agents - applicability of DTAA - existence of PE in India - Held that:- In the present case, the non-resident commission agent is carrying out business outside India on behalf of resident assessee and therefore, in our considered opinion, this Explanation 2 to section 9(1) (i) is not applicable in the present case. Examining the applicability of DTAA between India and various countries i.e., Qatar, South Africa, Spain, USA, Singapore and Argentina. Article 7 in the DTAAs regarding business profits is similar in all these DTAAs and as per the same, profits of an enterprise of a contracting State shall be taxable only in that State, unless the enterprise carries on business in the other contracting States through a PE situated therein. Therefore, in the absence of a finding that commission agents are having PE in India as per Article 7 of DTAAs between India and these countries, the business profit of commission agents cannot be brought to tax in India and as per section 90(2), if DTAA is more beneficial than the domestic laws, then DTAA has to prevail. Thus commission payment made by the assessee to these commission agents outside India for procuring export orders cannot be brought to tax in India and as a consequence, TDS is not deductible - Decided in favour of assessee.
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