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2019 (5) TMI 1602 - AT - Income TaxTDS u/s 195 - commission paid to foreign commission agent - Addition u./s 40(a)(ia) - as per assessee foreign agents rendered services out of India for procurement of the orders from the overseas buyers and for getting approval of the goods - PE in India - HELD THAT:- There is no dispute that the agents being located outside India and not resident of India were canvassing sales for the assessee for customers abroad. It is an admitted position by the AO himself that the agents are not resident in India further to make disallowance AO did not establish that they have any permanent establishment in India. Therefore it is not a case where the non-resident agents are carrying on any business activity in India. Assessee has engaged the services of non-resident agents outside India on pure commercial considerations for its sales outside India and also to pursue the payments to be made by the purchasers as located abroad. AO has also not established that what is the business connection of those agents in India in terms of provisions of section 9(1) (i). AO has merely mentioned these section but the criteria for satisfying them have also not been established. Even Otherwise Section 9(1)(i) is applicable on the net the profits of a non - resident which can reasonably be attributed to operations carried out in India. In the prsesnt case the agents have not carried out any operations in India. He also did not specify that what kind of services in the nature of Managerial, Technical or consultancy rendered by these agents to assessee to fall the services under the definition of Fees for technical services u/s 9 (1) (vii) . The principle still holds good that the payments to non-resident are liable for tax in India only if they satisfy the test of chargeability in India. In the present case the ld AO has not established it. - Decided in favour of assessee
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