TDS not required to be deducted on commission paid to overseas agents: Delhi HC


TDS not required to be deducted on commission paid to overseas agents: Delhi HC



Case Title: PCIT Versus Maharani Enterprises

Case No.: ITA 22/2021


  1. The respondent/assessee had sought a deduction of expenditure, which was the commission paid to agents overseas, but had not deducted the tax at source.
  2. According to the AO, the non-deduction of TDS under Section 195 of the Income Tax Act, disentitles the assessee to avail of any deduction on that account.
  3. The assessee contended that the commission paid to overseas agents was not chargeable to tax under the Act. Therefore, it had no obligation to deduct TDS.
  4. The department contended that the question of whether any income is chargeable to tax in the hands of a non-resident agent is required to be considered in its assessment, and notwithstanding the question regarding the chargeability of such income, the payer is required to deduct and deposit TDS on any payments made by it.

Hon. Delhi HC held as under:

  1. There is no material on record to even remotely suggest that the non-resident, who had been paid the export commission, had any permanent establishment in India, carried on any business within the taxable territory in India, or had any business connection in India rendering them liable to pay tax.
  2. Section 195 of the Act provides for the deduction of tax in respect of the income that is chargeable under the Income Tax Act. There is no obligation on the part of an assessee to deduct or deposit tax if the payments made by it to non-residents are not chargeable to tax under the Income Tax Act.
  3. The appeal of the revenue is dismissed.


The copy of the order is as under:


1687498733-23 Del 2021 Haryana Rifle Assocaition