Assessee is liable to deduct TDS on payment made to foreign commission agents?
DEPUTY COMMISSIONER OF INCOME TAX vs. THE PANCHMAHAL STEEL LTD.
ISSUE
Whether assessee is liable to deduct TDS on payment made to foreign commission agents?
Business Expenditure—Foreign commission agents—Non deduction of Tax at source—Assessee company was engaged in manufacturing of steel billets and related products at its factory—Assessee had claimed expenditure of commission payment—AO made disallowance u/s 40(a)(ia) on ground that assessee failed to deduct TDS on alleged commission payment—CIT(A) allowed assessee’s claims—Held, payments made by assessee to alleged foreign commission agents did not involve element of income assessable in India, and therefore, there was no obligation upon assessee to deduct TDS—Revenue’s appeal dismissed.
HELD
The facts in both the case are identical. Both the assesses were engaged in manufacturing of steel billets, wire rods, bright bars etc. They have been exporting these products to foreign countries. They have certain agents who have procured orders outside India and the assessees have paid commission on such orders. Therefore, respectfully following order of the ITAT in the case of Welspun Corporation Ltd. (supra) as well as orders in the assessee’s own case, we are of the view that no interference is called for in the order of the ld.CIT(A).
CONCLUSION
Assessee is not liable to deduct TDS on payments made by assessee to foreign commission agents.
IN FAVOUR OF
Assessee
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