No withholding tax on commission paid to agents outside India for procuring orders: Agra ITAT
Ajay Kumar Singh Gaur v. ITO – [2021] 127 taxmann.com 630 (Agra – Trib.)
Short Overview:
Assessee was an exporter involved in the export of shoes.
Assessing Officer (AO) issued a show-cause notice to the assessee requiring him to furnish various details and information. While examining the books of account, AO pointed out discrepancies in the books of account.
As a result, AO held that assessee failed to deduct TDS on commission paid by assessee to agents situated outside India.
Consequently, AO made disallowances under Section 40(a)(ia).
On appeal, Agra ITAT held that Section 40(a)(ia) makes it abundantly clear that the assessee will not be entitled to deduction while computing the income chargeable under the head profits and gains from business if assessee has not deducted tax at source.
In assessee’s case, the commissions were paid outside India to agent for procuring orders for assessee.
The element of payment of commission was duly reflected in the bills for that purpose.
The commission was paid outside India and not in India.
Therefore, there was no situs in India. The modus operandi of assessee was clear that assessee was a recipient of income in India after deduction of commission by the buyer outside India.
Thus, no income had been received or paid inside India, which attracted TDS deduction in India. Therefore, assessee was not liable to deduct TDS in India
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