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2018 (10) TMI 582 - AT - Income TaxTDS u/s 195 - non deduction of tds on commission paid to the various commission agents outside India - According to AO this expenditure is disallowable as income of foreign agents is chargeable to tax the agents have the ‘business connection’ in India and tax should have been deducted under section 195 - Held that:- The commission is paid to the two parties for export sales. The foreign agents are non-resident and the services have been rendered undisputedly by them outside India. The commission payment was also supported by the copy of the agreement and confirmation of commission paid. The copy of the passport of the commission agents were also submitted along with the party wise and invoice wise details resulting into payment of commission. Therefore it is not the case that the payment has been made to on identified parties. Further, The revenue has not brought any material on record to show that either of these commission agents has rendered any of their services in India and the payments have been made to them in India. In view of the finding of the learned Commissioner appeals, we are of the opinion that the income of the foreign agents is not chargeable to tax in India, as they do not have any ‘business connection’ as per provisions of section 9 of the income tax act. In absence of any business connection, the income is not chargeable to tax under section 5 of the income tax act of the non-resident foreign agents. Thhe natural consequences is that on such payment assessee is not obliged to deduct tax at source under section 195 of the income tax act. The learned Commissioner of income tax appeals has relied upon the decision of the jurisdictional High Court EON TECHNOLOGY P. LIMITED [2011 (11) TMI 20 - DELHI HIGH COURT] wherein it has been held that when a non-resident agent operates outside the country no part of his income arises in India and since payment is remitted directly abroad and merely because an entry in the books of accounts of the assessee is made, it did not mean that non-resident has received any payment in India. Therefore, no business connection is established and income tax was not deductible at source and hence no disallowance is called for. We direct learned assessing officer to delete the disallowance on account of commission paid to foreign agent who did not render any services in India. - Decided against revenue.
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