ACIT, CHENNAI vs. GOPAKUMARAN NAIR, CHENNAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the payment was for sales commission for procuring orders, not for managerial or technical services. Therefore, the disallowance made by the Assessing Officer was not justified.
What were the facts?
The assessee paid a commission of over ₹1.64 crore to a foreign agent for procuring orders. The Assessing Officer disallowed this claim for non-deduction of TDS under Section 195, treating it as payment for managerial/technical services. The CIT(Appeals) deleted this disallowance.
What were the issues?
Whether the payment made to a foreign agent for procuring orders constitutes a 'fee for technical services' or 'commission' for the purpose of TDS under Section 195 and consequential disallowance under Section 40(a)(ia).
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
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- CIT v. Faizan Shoes (P.) Ltd.139 citing367 ITR 155 · 2014 · HC
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) – 7, Chennai, dated 07.12.2016 and pertains to assessment year 2012-13. The assessee has filed cross-objection in respect of the same order of the CIT(Appeals).
Therefore, we heard both the appeal and the cross-objection together and disposing of the same by this common order.
There was a delay of 29 days in filing the cross-objection by the assessee. The assessee has filed a petition for condonation of delay.
We have heard the Ld. representative and the Ld. D.R. We find that there was sufficient cause for not filing the cross-objection before the stipulated time. Therefore, we condone the delay and admit the cross- objection.
Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the assessee paid a sum of ₹1,64,55,173/- to Shri Guiral Philippe, an agent outside the country in France, towards commission.
The assessee has to deduct tax as required under Section 195 of the Income-tax Act, 1961 (in short 'the Act'). Since tax was not deducted as required under Section 195 of the Act, according to the Ld. D.R., the Assessing Officer disallowed the claim of the assessee under Section 40(a)(ia) of the Act. According to the Ld. D.R., even though the assessee claimed that the commission was paid for selling of goods at foreign country, on examination of email correspondences between the parties, the Assessing Officer found that the payment was made by the assessee for managerial and technical services. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in deleting the disallowance made by the Assessing Officer.
On the contrary, Shri V. Elangovan, the Ld. representative for the assessee, submitted that what was paid by the assessee was sales commission, as per agreement, at the rate of 10%. According to the Ld. representative, no managerial or technical services were rendered by the foreign agent. The foreign agent procured orders on behalf of the assessee. Therefore, according to the Ld. representative, the CIT(Appeals) by placing reliance on the judgment of Madras High Court in CIT v. Faizon Shoes Pvt. Ltd. (2014) 367 ITR 155 and the order of this Tribunal in India Shoes Export India Ltd. in dated 04.02.2015, deleted the disallowance made by the Assessing Officer.
We have considered the rival submissions on either side and perused the relevant material available on record. A perusal of the material available on record indicates that the foreign agent procured orders on behalf of the assessee for selling of goods. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) allowed the claim of the assessee by rightly placing reliance on the judgment of Madras High Court in Faizon Shoes Pvt. Ltd. (supra). In view of the above, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
The cross-objection filed by the assessee is only to support the order of the CIT(Appeals). Therefore, the same is dismissed as infructuous.
In the result, both the appeal of the Revenue and the cross- objection of the assessee stand dismissed.
Order pronounced on 16th February, 2018 at Chennai.
More judgments on Section 195
- Subramanian Aravind, Tuticorin vs Ward 1, TuticorinITA 297/CHNY/2026[2018-2019]Status: Disposed28 Sept 2026AY 2018-2019
- Gmp Technical Solutions Private Limited… vs Deputy Commissioner of Income Tax, MumbaiITA 6155/MUM/2025[2014-15]Status: Disposed21 Sept 2026AY 2014-15
- M/S. Sarjak Container Lines Pvt Ltd, Mumbai vs DCIT, Circle 3(1)(1), MumbaiITA 1791/MUM/2026[2022-23]Status: Disposed16 Sept 2026AY 2022-23
- Universal Tractor Holding Llc, Usa vs DCIT, International Taxation Circle…ITA 2216/DEL/2022[2019-20]Status: Disposed15 Sept 2026AY 2019-20
- Buttercup Publishing Private Limited, Delhi vs ITO Int Tax. 1(1)(2), DelhiITITA 19/DEL/2026[2019-20]Status: Disposed7 Sept 2026AY 2019-20
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