The Assistant Commissioner Of Income Tax vs. Kewalram Textiles Private Ltd. - (Income Tax Appellate Tribunal) (12 Jul 2023)

Commission earned by NRI for services rendered outside India could not be deemed to be income which had either accrued or arisen in India

MANU/IB/0343/2023

Direct Taxation

The bunch of appeals filed by the Revenue are directed against the orders passed by the National Faceless Appeal Centre (NFAC), arising out of the orders passed by the DCIT, whereby and whereunder addition in respect of foreign commission paid to foreign agents without deducting TDS under Section 40(a)(i) of the Income Tax Act, 1961 (IT Act) has been deleted.

Supreme Court in the case of CIT vs. Toshoku Ltd. on identical issue held that, the commission agent who does not carry out any business operation in India and acts as a selling agent outside India is not chargeable to tax in India and that the receipt in India of the sale proceeds remitted by the purchasers from abroad did not amount to an operation carried out by the non-resident commission agent in India as contemplated by clause (a) of the Explanation to Section 9(1)(i) of the Act. The Supreme Court has categorically held that, the commission amounts which were earned by the non-resident for services rendered outside India could not be deemed to be income which had either accrued or arisen in India.

In view of the entire aspect of the matter and respectfully relying upon the ratio laid down by the Hon'ble Supreme court and the Co-ordinate Bench, present Tribunal do not find any reason to deviate from the stand taken by the Co- ordinate Bench which was passed in favour of the assessee by confirming the order passed by the Revenue in assessee's own case for A.Ys. 2010-11 & 2011-12. The impugned order passed by the Revenue is, therefore, found to be just and proper so as to warrant interference. Revenue's appeal is dismissed.

Tags : ASSESSMENT FOREIGN COMMISSION DELETION