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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Per Shri A.T.Varkey, JM
This appeal preferred by the Revenue is against the order of the Ld. CIT(A)-5, Kolkata dated 10.04.2017 for assessment year 2010-11 .
The sole issue involved in this appeal of revenue is against the action of Ld. CIT(A) in deleting the addition of Rs.29,92,410/- u/s. 40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for not deducting TDS on commission paid .
Briefly stated the facts are that the AO observed from the record that during the year the assessee paid commission outside India to Rs.29,92,410/- without deducting TDS. According to AO, the assessee is liable to deduct TDS u/s. 40(a)(ia) of the Act for making payment of such commission outside India. Since the assessee did not deduct the TDS on the commission paid amounting to Rs.29,92,410/- the AO disallowed the same and added back the amount to the total income of the assessee. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who deleted the disallowance. Aggrieved, revenue is before us.
Unimark International Pvt. Ltd., AY 2010-11 4. We have heard rival submissions and gone through the facts and circumstances of the case. During the previous year relevant to the assessment year 1910-11, the assessee paid commission outside India to an agent of the assessee Mr. Satish C. Manaktala for services rendered outside India. The question was whether the commission earned by the non- resident sales agents could be taxed in India. On an identical issue, Hon’ble Supreme Court in the case of CIT Vs. Toshoku Ltd. (1980) 125 ITR 525 has held as under:
In the instant case, the non-resident assessees did not carry on any business operations in the taxable territories. They acted as selling agents outside India. The receipt in India of the sale proceeds of tobacco remitted or caused to be remitted by the purchasers from abroad does not amount to an operation carried out by the assessees in India as contemplated by cl. (a) of the Explanation to s. 9(1)(i) of the Act. The commission amounts which were earned by the non-resident assessees for services rendered outside India cannot, therefore, be deemed to be incomes which have either accrued or arisen in India. The High Court was, therefore, right in answering the question against the department.
Since the issue is squarely covered in favour of the assessee and the Ld. DR was unable to bring out any change in the facts or in law, we respectfully following the order of Hon’ble Supreme Court cited supra dismiss this appeal of the revenue.
In the result, appeal of revenue is dismissed. Order is pronounced in the open court on 22.06.2018 Sd/- Sd/- (M. Balaganesh) (Aby. T. Varkey) Accountant Member Judicial Member Dated :22nd June, 2018 JD(Sr.P.S.) Copy of the order forwarded to:
1. 1. Appellant – ACIT, Circle-8(2), Kolkata. 2 Respondent – M/s. Unimark International Pvt. Ltd., 30D, J. L. Nehru Road, Kolkata-700 006.
3. The CIT(A) - 5, Kolkata. (sent through e-mail)