ANIXTER INDIA PRIVATE LIMITED,CHENNAI vs. INCOME TAX OFFICER, NOT APPLICABLE

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/Delhi, (hereinafter referred to as ‘Ld.CIT(A)’), Delhi, dated 16.09.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2018-19.

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 2 :: GROUNDS OF APPEAL The Appellant Company submits that the below grounds are independent and without prejudice to one another. “1. General 1.1. The order passed by the Learned Commissioner of Income-Tax (Appeal) ('CIT(A)'), National Faceless Appeal Centre dated 16 September 2025 under section 250 of the Income-tax Act, 1961 ('the Act') in relation to the final assessment order passed by the Income-tax Officer, National Faceless Assessment Centre ('AO') under section 143(3) rws 144B of the Act is bad in law and is contrary to the facts and circumstances of the present case. 2. Disallowance of expenses under section 40(a)(i) of the Act (Adjustment amounting to INR 3,86,73,151-Tax impact-INR 1,33,84,004) 2.1 The learned AO and CIT(A) errored in disallowing the corporate charges paid to Anixter Singapore Pte Ltd ('Anixter Singapore') amounting to INR 3,86,73,151 by invoking the provisions of section 40(a)(i) of the Act for non-withholding of taxes under section 195 of the Act. 2.2 The Ld. AO and the Ld. CIT(A) erred in law by failing to appreciate that the subject corporate charges are not taxable in India in the hands of the Anixter Singapore under the India Singapore Double Taxation Avoidance Agreement ('DTAA'). 2.3 The Ld. CIT(A) erred in law by concluding that overseas entity with which the appellant company had transaction, has a Permanent Establishment ('PE') in India. 2.4 The Ld. AO erred in concluding that the said payment shall be taxable as fee for technical services without appreciating that the said service did not make available any technical knowledge, skills, know-how, experience, etc which equips the Appellant to independently perform the technical function itself without depending on the service provider as required in Article 12 of the India-Singapore DTAA. 2.5 The Ld. AO and the Ld. CIT(A) failed to appreciate that there is no requirement to withhold taxes as such payments were not taxable in India having regard to the beneficial provisions under India-Singapore DTAA.

The Appellant craves leave to add to or alter, by deletion, substitution or otherwise, any or all of the above grounds of appeal, and to submit such statements, documents and papers as may be considered necessary either at or at any time before the hearing of this appeal.”

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 3 :: 3. Brief facts of the case are that the assessee ‘M/s Anixter India Private Limited is a private limited company registered under the Companies Act, 1956 with its registered office in Chennai and engaged in the business of distribution of communication products and electrical & electronic wires, cables & fasteners. For the AY.2018-19, the assessee had filed its return of income on 28.11.2018 declaring total income of Rs.8,91,14,540/- under the normal provisions of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and an income of Rs.8,80,10,701/- under the MAT provisions of the Act. Subsequently, the case of the assessee was selected for scrutiny under CASS and the AO inter alia noted that assessee had incurred an amount of Rs.3,86,73,151/- towards corporate charges payable to M/s Anixter Singapore Pvt. Ltd without deduction of tax u/s.195 of the Act and asked for explanation from assessee.

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 4 :: and therefore doesn’t fall within the ambit of the term ‘Fee for Technical Services’ (FTS) under the India-Singapore DTAA and hence, the subject payment are in the nature of business profits to the recipient and not taxable in the hands of the recipient in the absence of a permanent establishment (PE) in India. However, the AO didn’t accept the contention of assessee and instead concluded that the ibid payment shall be covered as ‘Fee for technical service/FTS’ under section 9(i)(vii) of the Act without considering the applicability of the relevant provisions of DTAA.

The reply filed by the appellant is considered. Similar issue was present in the appellant's case for AY 2017-18. While deciding that appeal the Ld. CIT(A) had observed that, "In this case, the AO had relied upon the premise that, the appellant company had transaction, was Permanent Establishment. OME TAX DEPARlling under the definition of Permanent Establishment.” In the case of Commissioner of Income-tax International Taxation 2 v. Mitsui and Co. [2025] 170 taxmann.com 828 (SC), the Honorable Supreme Court of India had upheld the observations made by the ITAT. The relevant extract of the SC's order is reproduced as below:- ......SLP dismissed against order of High Court that where Liaison Office (LO) of assessee, a non-resident company, did not finalize and transact a business deal and activities carried out by LO could not be said to be preparatory or auxiliary in nature, LO did not constitute Permanent Establishment of assessee.

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 5 :: INTERNATIONAL TAXATION: SLP dismissed against order of High Court that where MIPL was not performing additional function, in absence of material, it could not be taken as dependant agency PE to assessee, a non- resident company..." To decide this appeal, Business Services Agreement (BSA) is required to be examine in the light of above said decision. However, The appellant had not filed copy of BSA before me. As per the documents filed by the appellant following is the brief prescription of the services provided by Anixter Singapore to the appellant.

However, from the extract of email communication reproduced below is very clear that, The Anixter Singapore Company was providing marketing, technical, business promotion, business development services and accounting services to the appellant so as to increase the overseas clientele of appellant. The Anixter Singapore was entitled to reimbursement of all the actual expenses incurred by it in connection with such customer meets. Conferences, campaigns, road shows and other publicity exercise. Further, the Anixter Singapore was required to allocate some of its manpower for the purpose of answering and explaining the services of appellant to prospective customers who may be getting in touch from time to time with the Anixter Singapore as a result of its business developing. As apparent from the Emails, The Anixter Singapore was required to send a request to appellant on a monthly basis for about production sales dispatch, new customers vendors etc. so that at all times it is possible for the Anixter Singapore to answer a query, guide a prospective customer, provide necessary details and documents such that the prospective customer takes a decision on his own and may become a client of appellant. Here, it is very important to note that, Anixter Singapore, a Body corporate organized and registered as a Company by the Legal Registrar of the Government of Singapore in accordance with the laws in force in The Singapore, and it was engaged in the business of same field of the appellant.

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 6 :: Therefore, Anixter Singapore was competant enough to persuade the client, complete the process of online registration, and provide after sale service to the clients based at worldwide. All these facts suggested that, Anixter Singapore was acting as the Permanent Establishment of the appellant company. Therefore, I am of the opinion that, the AO's action of invoking provision of Section of 201 of IT Act is justified. As a result, all the grounds raised by the appellant in this regard are 6. Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is before us.

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 7 :: is no longer res-integra, and as noted similar/identical action was taken in assessee’s case by the AO/Ld.CIT(A), against which assessee preferred an appeal before this Tribunal and the Tribunal was pleased to accept the explanation of assessee that the payment in question was not taxable under the DTAA, hence there was no obligation to deduct tax u/s.195 of the Act, and therefore disallowance u/s. 40(a)(i) is legally unsustainable.; and Tribunal observed that section 195 applies only where the sum paid to a non-resident is chargeable to tax in India. Under Article 12 of the India-Singapore DTAA, services are taxable only if they "make available" technical knowledge or skill to the recipient. And since in this case there is neither transfer of technical knowledge nor ability in the hands of the assessee to apply any technical expertise independently, section 195 of the Act is not attracted; And that the Ld.CIT(A) erred in holding that Anixter Singapore has a PE in India, which finding is baseless and perverse. Tribunal is noted to have held that there is no fixed place of business, no permanence, no disposal test satisfied, and no dependent agent. And that mere receipt of corporate charges or rendering of support services cannot create a Permanent Establishment under the India-Singapore DTAA and gave relief to the assessee by holding as under: - “1…… 2…………

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 8 :: 3…….. 4………. 5……. 6. Before us, the Id.AR submitted that the impugned order of the Ld.CIT(A) dated 16.09.2025 is bad in law and unsustainable on facts. The entire disallowance under section 40(a)(i) proceeds on an incorrect assumption that the assessee was liable to deduct tax u/s.195, without first examining whether the payment was at all chargeable to tax in India. He further submitted that it is settled law that section 195 applies only where the sum paid to a non-resident is chargeable to tax in India. If the payment itself is not taxable, there can be no withholding obligation and, consequently, no disallowance under section 40(a) (i). He further, pleaded that in the present case, the corporate charges paid to Anixter Singapore are not taxable in India. The authorities below have wrongly characterised these payments as Fees for Technical Services. Under Article 12 of the India-Singapore DTAA, services are taxable only if they "make available" technical knowledge or skill to the recipient. The services here are routine intra-group managerial and administrative support services. There is no transfer of technical knowledge, no enduring benefit, and no ability in the hands of the assessee to apply any technical expertise independently. Therefore, the "make available" test is clearly not satisfied. Once the DTAA applies, section 90 mandates that the treaty provisions override domestic law. Since the payment is not taxable under the DTAA, section 195 simply does not get triggered. The Ld.CIT(A) has applied section 195 mechanically, which is impermissible in law. The Ld.CIT(A) has further erred in holding that Anixter Singapore has a Permanent Establishment in India. This finding is completely unsupported by facts. There is no fixed place of business, no permanence, no disposal test satisfied, and no dependent agent. Mere receipt of corporate charges or rendering of support services cannot create a Permanent Establishment under the India- Singapore DTAA. The finding is also internally contradictory, as the Assessing Officer himself had observed that the transactions fall outside section 9(1)(vii)(b). Therefore, he submitted that in these circumstances, the payment being non-taxable in India, there was no obligation to deduct tax u/s.195 of the Act, and the disallowance u/s. 40(a)(i) is wholly unsustainable. He furthermore, submitted that the finding on Permanent Establishment is equally erroneous. He prayed for the deletion of the disallowance of Rs.3,19,80,925/-. 7. Per contra, the Id.DR relied upon the order of the Id.CIT(A) and pleaded for the affirmation of the disallowance. 8. We have carefully considered the rival submissions, perused the orders of the authorities below and examined the material placed on record. The short issue for our consideration is whether the corporate charges paid by the assessee to Anixter Singapore Pte. Ltd. amounting to Rs.3,19,80,925/- are chargeable to tax in India so as to attract withholding obligation u/s.195 of the Act and consequent disallowance under section 40(a)(i) of the Act. It is a settled position of law that the obligation to deduct tax at source u/s.195 arises only when the sum paid to a non-resident is chargeable to tax in India. If the payment itself is not chargeable to tax, the provisions of section 195 do not get triggered and no disallowance can

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 9 :: be made under section 40(a)(i). This principle has been consistently upheld by the Courts. 9. In the present case, although Business Services Agreement (BSA) was not placed before the Id.CIT(A), however the nature of services for which the corporate charges were paid has been explained as intra-group managerial, administrative, marketing and business support services. From the material on record, it is evident that these services do not "make available" any technical knowledge, experience, skill, know-how or processes to the assessee so as to enable it to apply such technical knowledge independently in future. Therefore, the payments do not qualify as Fees for Technical Services within the meaning of Article 12 of the India- Singapore DTAA. Once the DTAA is applicable, the provisions of the treaty, being more beneficial to the assessee, override the provisions of the Act by virtue of section 90 of the Act. Since the impugned payments are not taxable as FTS under the DTAA, the same can at best be regarded as business profits in the hands of the recipient. 10. As regards the finding of the Ld.CIT(A) that Anixter Singapore constituted a Permanent Establishment in India, we find that the said conclusion is not supported by cogent material on record. There is no evidence to establish the existence of a fixed place PE, nor is there any material to demonstrate that Anixter Singapore was carrying on business in India through a dependent agent satisfying the conditions prescribed under the India-Singapore DTAA Mere rendering of support services from outside India or coordination activities cannot, by itself, give rise to a Permanent Establishment. The finding of PE recorded by the Ld.CIT(A) is thus unsustainable and based on surmises and conjectures. In the absence of a Permanent Establishment in India, the business profits of Anixter Singapore are not taxable in India under Article 7 of the DTAA. Consequently, the payments made by the assessee are not chargeable to tax in India and no obligation to deduct tax at source under section 195 arises. 11. In view of the above discussion, we hold that the Assessing Officer was not justified in invoking the provisions of section 40(a)(i) of the Act. The disallowance of Rs.3,19,80,925/- made on account of alleged non- deduction of tax at source is hereby deleted. Accordingly, the appeal filed by the assessee is allowed. 12. In the result, the appeal of the assessee is allowed.”

Since, there is no change in facts or law, respectfully following the decision of the Tribunal in assessee’s own case for AY 2017-18 (supra), we overturn the decision of the Ld.CIT(A)/AO and hold that that the AO/CIT(A) erred in invoking the provisions of section

ITA No.3681/Chny/2025 (AY 2018-19) Anixter India Private Limted :: 10 :: 40(a)(i) of the Act. Hence the disallowance of Rs.3,86,73,151/- made on account of alleged non-deduction of tax at source is hereby deleted. Accordingly, the appeal filed by the assessee is allowed.

Order pronounced on the 09th day of July 2026, in Chennai. Sd/- Sd/- (एबी टी. वक�) (एस. आर. रघुनाथा) (ABY T. VARKEY) (S.R.RAGHUNATHA) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated: 09th July, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.07.14 14:34:14 +05'30'