CIT v. Toshoku Ltd.

125 ITR 525Supreme Court of India1980#295 most cited

What is CIT v. Toshoku Ltd. authority for?

A non-resident commission agent is not chargeable to tax in India on commission income if no business operations are carried out in India. Consequently, no TDS is required under Section 195 on such payments.

270

judgments rely on this decision, according to BharatTax’s citation analysis of 366,005 Indian tax judgments — from 2007 to 2026.

Also referred to as

CIT v. Toshoku Ltd. · Toshoku Ltd. · Section 9(1)(i) · Section 195 · Section 40(a)(i) · non-resident commission agent · sales commission taxable in India · business connection · TDS on non-residents · DTAA override · deemed to accrue or arise

Sections most often in play

Section 40(a)(i)Section 195Section 37(1)Section 143(3)Section 9(1)(i)Section 9(1)(vii)Section 115JBSection 1961

Issues it is cited on

section 5(2)(b)section 9(1)(i)section 195(1)section 195(2)section 5(2)business connectionsection 40(a)(i)permanent establishmentfees for included servicessection 195section 9(1)section 9(1)(vii)

Judgments citing CIT v. Toshoku Ltd.

DCIT, Central Circle 2, Rajkot vs. Aditya Birla Global Trading (India) Pvt. Ltd. (Swiss Singapore India Pvt. Ltd., Gandhidham

In the result, appeal filed by the assessee, in ITA No

ITA 353/RJT/2024[2017-18]Status: DisposedITAT Rajkot13 Feb 2025AY 2017-18

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinha

Section 143(3)Section 195Section 37(1)Section 40

…5 of the Act did not arise as no income was accrued in India. During the appellate proceedings, before the learned CIT(A), the assessee has relied on the following judgements: (i) The decision of the Hon'ble Supreme Court in the case of CIT Vs. Toshoku Ltd. (125 ITR 525), wherein the Hon'ble Apex Court held that Commission paid to non-resident is not taxable in India. Further, the Supreme Court following the decision in CIT Vs. R. D. Agrawal and Co. (56 ITR 20)(SC) held that if no operation are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any busin…

Deputy Commissioner of Income Tax, Central Circle 2, Rajkot vs. Aditya Birla Global Trading(India) Pvt.Ltd. (Swiss Singapore India Pvt. Ltd.), Gandhidham

In the result, appeal filed by the assessee, in ITA No

ITA 284/RJT/2024[2016-17]Status: DisposedITAT Rajkot13 Feb 2025AY 2016-17

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinha

Section 143(3)Section 195Section 37(1)Section 40

…5 of the Act did not arise as no income was accrued in India. During the appellate proceedings, before the learned CIT(A), the assessee has relied on the following judgements: (i) The decision of the Hon'ble Supreme Court in the case of CIT Vs. Toshoku Ltd. (125 ITR 525), wherein the Hon'ble Apex Court held that Commission paid to non-resident is not taxable in India. Further, the Supreme Court following the decision in CIT Vs. R. D. Agrawal and Co. (56 ITR 20)(SC) held that if no operation are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any busin…

Aditya Birla Global Trading (India) Private Limited, Gujarat vs. DCIT-ACIT Cent-2 RKT, Rajkot

In the result, appeal filed by the assessee, in ITA No

ITA 226/RJT/2024[2018-2019]Status: DisposedITAT Rajkot13 Feb 2025AY 2018-2019

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinha

Section 143(3)Section 195Section 37(1)Section 40

…5 of the Act did not arise as no income was accrued in India. During the appellate proceedings, before the learned CIT(A), the assessee has relied on the following judgements: (i) The decision of the Hon'ble Supreme Court in the case of CIT Vs. Toshoku Ltd. (125 ITR 525), wherein the Hon'ble Apex Court held that Commission paid to non-resident is not taxable in India. Further, the Supreme Court following the decision in CIT Vs. R. D. Agrawal and Co. (56 ITR 20)(SC) held that if no operation are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any busin…

Aditya Birla Global Trading (India) Private Limited, Gujarat vs. Assistant Commissioner of Income Tax, Circle 1, Gandhihdam, Gandhidham, Gujarat

In the result, appeal filed by the assessee, in ITA No

ITA 225/RJT/2024[2015-2016]Status: DisposedITAT Rajkot13 Feb 2025AY 2015-2016

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinha

Section 143(3)Section 195Section 37(1)Section 40

…5 of the Act did not arise as no income was accrued in India. During the appellate proceedings, before the learned CIT(A), the assessee has relied on the following judgements: (i) The decision of the Hon'ble Supreme Court in the case of CIT Vs. Toshoku Ltd. (125 ITR 525), wherein the Hon'ble Apex Court held that Commission paid to non-resident is not taxable in India. Further, the Supreme Court following the decision in CIT Vs. R. D. Agrawal and Co. (56 ITR 20)(SC) held that if no operation are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any busin…

M/S Model Exim, Kanpur vs. The Principal Commissioner of Income Tax (Central), Kanpur

In the result, the appeal of the assessee is allowed

ITA 137/LKW/2022[2011-12]Status: DisposedITAT Lucknow05 Nov 2024AY 2011-12

Bench: Shri Anadee Nath Misshra & Shri Subhash Malguriam/S. Model Exim Pcit (Central) V. 624-C, Defence Colony, 7/81-B, Tilak Nagar, Jajmau, Kanpur-208010. Kanpur. Pan:Aadfm6163H (Appellant) (Respondent) Appellant By: Shri Swaran Singh, C.A. Respondent By: Smt Namita S. Pandey, Cit(Dr) Date Of Hearing: 29 10 2024 Date Of Pronouncement: 05 11 2024 O R D E R

For Appellant: Shri Swaran Singh, C.AFor Respondent: Smt Namita S. Pandey, CIT(DR)
Section 139Section 153CSection 153DSection 263Section 263(1)

…s stated the disallowance of the commission under section 9(1)(vii) as FTS is not applicable to the facts of the case as per reason given in the reply. In support of his claim he has relied upon the following case laws in his favour: - 1. CIT Vs. Toshoku Ltd (125 ITR 525 SC) 2. CIT Vs. Eon Technology P Ltd (ITA. No.1167 dated 8th Nov, 2011 Delhi HC) 3. CIT Vs. Sheraton International Inc (2009) 313 ITR 267 4. CIT Vs. Indopel Garments (P)Ltd Vs. DCIT (2001 72 TTJ Mad 702) 5. Spahi Projects (P) Ltd, In Re (315 ITR 374 AAR. 6. Ind Telesoft P Ltd., (543 of 2001) 7. DCIT Vs. Ardeshi B Cursetjee & Sons Ltd (2008 115 TTJ…

Assistant Commissioner of Income Tax Circle 2(1) (1) Ahmedabad, Vejalpur Ahmedabad vs. Inductotherm (India) Private Limited, Ahmedabad

Appeal are dismissed

ITA 598/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad21 Oct 2024AY 2016-17

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokar

For Appellant: Ms. Chandni Shah, ARFor Respondent: Shri Prateek Sharma, Sr.DR
Section 115JSection 143(2)Section 143(3)Section 144C(3)Section 14ASection 195Section 40Section 92C

…on paid to foreign agents was not taxable in India, as the agents operated outside India and provided services solely outside India. Hence, the income did not accrue or arise in India. Relying on the Hon’ble Supreme Court ruling in CIT vs. Toshoku Ltd. (1980) 125 ITR 525 (SC), the CIT(A) concluded that commission payments to foreign agents, who operate exclusively outside India do not attract tax liability in India. Therefore, there was no requirement to deduct tax at source under Section 195 of the Act. The CIT(A) observed that Section 195 of the Act applies only if the payment to the non-resident is taxable in…

Deputy Commissioner of Income Tax, Circle -1(1)(1), Bengaluru vs. Algonomy Software Private Limited, Bengaluru

In the result, the appeals filed by the Revenue for AY 2016-17 to 2018-

ITA 1229/BANG/2024[2018-19]Status: DisposedITAT Bangalore15 Oct 2024AY 2018-19

Bench: Shri George George K. & Ms. Padmavathy S.

For Appellant: Shri Narendra Kumar Jain, AdvocateFor Respondent: Shri R.N. Siddappaji, CIT-DR
Section 133ASection 14Section 195Section 37Section 40Section 9(1)(vii)

…ices under section 9(1)(vii) of the I.T.Act. The High Court held that the skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use. ............... 11. The Hon'ble Supreme Court in the case of CIT v Toshoku Ltd (1980) 125 ITR 525 (SC) held that the sales commission paid to the commission agents outside India was not taxable in India. The Apex Court observed Algonomy Software Pvt. Ltd. that the sales commission earned by the non-resident agents cannot be deemed to accrue or arise in India. 12. The Hon'ble Madras High Court in the case of CIT vs Faizan Shoes (P.) Ltd (2014…

Deputy Commissioner of Income Tax, Circle - 1(1)(1), Bengaluru vs. Algonomy Software Private Limited, Bengaluru

In the result, the appeals filed by the Revenue for AY 2016-17 to 2018-

ITA 1226/BANG/2024[2017-18]Status: DisposedITAT Bangalore15 Oct 2024AY 2017-18

Bench: Shri George George K. & Ms. Padmavathy S.

For Appellant: Shri Narendra Kumar Jain, AdvocateFor Respondent: Shri R.N. Siddappaji, CIT-DR
Section 133ASection 14Section 195Section 37Section 40Section 9(1)(vii)

…ices under section 9(1)(vii) of the I.T.Act. The High Court held that the skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use. ............... 11. The Hon'ble Supreme Court in the case of CIT v Toshoku Ltd (1980) 125 ITR 525 (SC) held that the sales commission paid to the commission agents outside India was not taxable in India. The Apex Court observed Algonomy Software Pvt. Ltd. that the sales commission earned by the non-resident agents cannot be deemed to accrue or arise in India. 12. The Hon'ble Madras High Court in the case of CIT vs Faizan Shoes (P.) Ltd (2014…

Deputy Commissioner of Income Tax-Circle-1(1)(1), Bangalore., Bengaluru vs. Algonomy Software Private Limited, Bengaluru

In the result, the appeals filed by the Revenue for AY 2016-17 to 2018-

ITA 1196/BANG/2024[2016-17]Status: DisposedITAT Bangalore15 Oct 2024AY 2016-17

Bench: Shri George George K. & Ms. Padmavathy S.

For Appellant: Shri Narendra Kumar Jain, AdvocateFor Respondent: Shri R.N. Siddappaji, CIT-DR
Section 133ASection 14Section 195Section 37Section 40Section 9(1)(vii)

…ices under section 9(1)(vii) of the I.T.Act. The High Court held that the skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use. ............... 11. The Hon'ble Supreme Court in the case of CIT v Toshoku Ltd (1980) 125 ITR 525 (SC) held that the sales commission paid to the commission agents outside India was not taxable in India. The Apex Court observed Algonomy Software Pvt. Ltd. that the sales commission earned by the non-resident agents cannot be deemed to accrue or arise in India. 12. The Hon'ble Madras High Court in the case of CIT vs Faizan Shoes (P.) Ltd (2014…

M/S. Steer America Inc., United States vs. The Deputy Commissioner of Income Tax, International Taxation Circle -1(2), Bengaluru

In the result, both the appeals of the assessee are partly allowed

ITA 833/BANG/2024[2014-15]Status: DisposedITAT Bangalore10 Jul 2024AY 2014-15

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadav

For Appellant: Sri Vasanth Kumar, A.RFor Respondent: Ms. Anjala Sahu, D.R
Section 144CSection 147Section 148

…h Court held that the skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use. 7.5 In this regard, he relied on the following judgements: i. Judgement of Hon'ble Supreme Court in the case of CIT v Toshoku Ltd (1980) 125 ITR 525 (SC) ii. Judgement of Hon'ble Madras High Court in the case of CIT vs Faizan Shoes (P.) Ltd (2014) 48 taxmann.com 48 (Madras) iii. Decision of Bangalore Bench of Tribunal in the case of Exotic Fruits (P.) Ltd reported in (2013) 10 taxmann.com 348 (Bangalore- Trib.). iv. Decision of Bangalore Bench of Tribunal in the case of iRunway India (P) Ltd…

M/S. Steer America Inc., United States vs. The Deputy Commissioner of Income Tax, International Taxation Circle -1(2), Bengaluru

In the result, both the appeals of the assessee are partly allowed

ITA 832/BANG/2024[2013-14]Status: DisposedITAT Bangalore10 Jul 2024AY 2013-14

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadav

For Appellant: Sri Vasanth Kumar, A.RFor Respondent: Ms. Anjala Sahu, D.R
Section 144CSection 147Section 148

…h Court held that the skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use. 7.5 In this regard, he relied on the following judgements: i. Judgement of Hon'ble Supreme Court in the case of CIT v Toshoku Ltd (1980) 125 ITR 525 (SC) ii. Judgement of Hon'ble Madras High Court in the case of CIT vs Faizan Shoes (P.) Ltd (2014) 48 taxmann.com 48 (Madras) iii. Decision of Bangalore Bench of Tribunal in the case of Exotic Fruits (P.) Ltd reported in (2013) 10 taxmann.com 348 (Bangalore- Trib.). iv. Decision of Bangalore Bench of Tribunal in the case of iRunway India (P) Ltd…

DCIT, Nashik vs. Kunj Exim Private Limited, Malegaon

In the result, matter is restored to the file of NFAC on the above lines

ITA 971/PUN/2023[2014-15]Status: HeardITAT Pune04 Jul 2024AY 2014-15

Bench: Shri Inturi Rama Rao & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.971/Pun/2023 िनधा"रण वष" /Assessment Year : 2014-15 Dcit, Nashik Vs. Kunj Exim Private Limited, Tamba Kanta No.75, Pinjar Street, Malegaon, Nashik – 423 203 Maharashtra Pan : Aaeck6572G Appellant Respondent

For Appellant: Shri Pramod S. ShingteFor Respondent: Shri Akhilesh Srivastava
Section 143(3)Section 195Section 37(1)Section 40

…accepted the genuineness of the expenditure. However, the CIT(A)/NFAC dealt in great detail about the liability of the assessee to deduct tax at source u/s.195 of the Act and following the decision of Hon’ble Supreme Court in the case of CIT Vs. Tokshuku Ltd. 125 ITR 525 (SC) and CBDT Circular No.23, dated 23.07.1969 proceeded to hold that there was no liability on the assessee to deduct tax at source and accordingly allowed the claim of the assessee. This finding is under challenge before us by the Revenue. 8. As regards the finding on the liability of the assessee to deduct tax at source u/s.195, on perusal of…

Rane Engine Valve Ltd, Chennai vs. DCIT Corporate Circle-5(1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 885/CHNY/2020[2015-16]Status: DisposedITAT Chennai03 Jul 2024AY 2015-16

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

…rders for which export commission or retainer is paid. The payments involved are purely business profits covered under Article-7 of the DTAA with Germany. The assessee placed reliance on judicial pronouncement as below :- "In the case of CIT vs. Toshoka Ltd. 125 ITR 525 (SC) and Spahi Projects P. Ltd., In re 315 ITR 374 (AAR) , it has been held that amount of commission earned by nonresident foreign payees for rendering service outside India in connection with procuring export orders could not be deemed to be income arising in India." In the case of Cushman & Wakefield (2008) 305 ITR 208, it was held that there…

Rane Engine Valve Limited, Chennai vs. DCIT Corporate Circle 5(1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 2815/CHNY/2018[2014-15]Status: DisposedITAT Chennai03 Jul 2024AY 2014-15

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

…rders for which export commission or retainer is paid. The payments involved are purely business profits covered under Article-7 of the DTAA with Germany. The assessee placed reliance on judicial pronouncement as below :- "In the case of CIT vs. Toshoka Ltd. 125 ITR 525 (SC) and Spahi Projects P. Ltd., In re 315 ITR 374 (AAR) , it has been held that amount of commission earned by nonresident foreign payees for rendering service outside India in connection with procuring export orders could not be deemed to be income arising in India." In the case of Cushman & Wakefield (2008) 305 ITR 208, it was held that there…

Rane Engine Valve Limited, Chennai vs. DCIT Corporate Circle 5 (1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 1477/CHNY/2018[2013-14]Status: DisposedITAT Chennai03 Jul 2024AY 2013-14

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

…rders for which export commission or retainer is paid. The payments involved are purely business profits covered under Article-7 of the DTAA with Germany. The assessee placed reliance on judicial pronouncement as below :- "In the case of CIT vs. Toshoka Ltd. 125 ITR 525 (SC) and Spahi Projects P. Ltd., In re 315 ITR 374 (AAR) , it has been held that amount of commission earned by nonresident foreign payees for rendering service outside India in connection with procuring export orders could not be deemed to be income arising in India." In the case of Cushman & Wakefield (2008) 305 ITR 208, it was held that there…

Rane Engine Valves Limited, Chennai vs. DCIT, Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 1498/CHNY/2017[2012-13]Status: DisposedITAT Chennai03 Jul 2024AY 2012-13

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

…rders for which export commission or retainer is paid. The payments involved are purely business profits covered under Article-7 of the DTAA with Germany. The assessee placed reliance on judicial pronouncement as below :- "In the case of CIT vs. Toshoka Ltd. 125 ITR 525 (SC) and Spahi Projects P. Ltd., In re 315 ITR 374 (AAR) , it has been held that amount of commission earned by nonresident foreign payees for rendering service outside India in connection with procuring export orders could not be deemed to be income arising in India." In the case of Cushman & Wakefield (2008) 305 ITR 208, it was held that there…

Rane Engine Valves Limited, Chennai vs. DCIT, Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 1497/CHNY/2017[2011-12]Status: DisposedITAT Chennai03 Jul 2024AY 2011-12

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

…rders for which export commission or retainer is paid. The payments involved are purely business profits covered under Article-7 of the DTAA with Germany. The assessee placed reliance on judicial pronouncement as below :- "In the case of CIT vs. Toshoka Ltd. 125 ITR 525 (SC) and Spahi Projects P. Ltd., In re 315 ITR 374 (AAR) , it has been held that amount of commission earned by nonresident foreign payees for rendering service outside India in connection with procuring export orders could not be deemed to be income arising in India." In the case of Cushman & Wakefield (2008) 305 ITR 208, it was held that there…

Income Tax Officer, Ward-2(1)(1), Bengaluru vs. G. Tex Inc, Bengaluru

In the result, the appeal filed by the revenue is dismissed

ITA 1129/BANG/2023[2011-12]Status: DisposedITAT Bangalore26 Jun 2024AY 2011-12

Bench: Shri Chandra Poojari & Shri Keshav Dubeyassessment Year : 2011-12

For Appellant: Shri Hemanth, CAFor Respondent: Shri V. Parithivel, JCIT-DR
Section 142(1)Section 143(3)Section 148Section 195Section 195(1)Section 250Section 40

…ax in India, the question of deducting TDS under the provisions of section 195 of the IT Act does not arise. We are also of the opinion that the principles laid down by Hon’ble Apex Court in the case of Commissioner of Income Tax vs. Thoshoku Ltd. reported in 125 ITR 525 (SC) is squarely applicable in the case of the Appellant. The Hon’ble Apex Court has held that the commission amount which were earned by the non-resident assessee for services rendered outside India cannot, therefore be deemed to be income which have either accrued or arisen in India. Further, relying on the decision in the case of DCIT, Cir - 2…

DCIT, Circle-8(1), Kolkata vs. Itc Limited, Kolkata

In the result appeals of the assessee are partly allowed for statistical purposes and the appeals of the revenue are dismissed

ITA 1223/KOL/2017[2011-12]Status: DisposedITAT Kolkata10 May 2024AY 2011-12

Bench: Shri Rajesh Kumar & Shri Sonjoy Sarma]

Section 115JSection 143(1)Section 37

…1223/Kol/2017 Assessment Year: 2010-11 & 2011-12 ITC Limited. of services by such non-resident agents were provided outside India. The Ld. A.R in defense of his arguments relied on the decision of Hon’ble Apex Court in the case of CIT vs. Toshoku Ltd. [1980] 125 ITR 525 (SC) . The Ld. A.R submitted that no part of the commission paid by the assessee accrued or arose or was deemed to accrue or arise to non-resident in India and therefore the same was not chargeable to tax in India and as such there was no obligation on the part of the assessee to deduct tax at source u/s 195 of the Act. The Ld. A.R also contended…

DCIT, Circle-8(1), Kolkata vs. Itc Limited, Kolkata

In the result appeals of the assessee are partly allowed for statistical purposes and the appeals of the revenue are dismissed

ITA 1222/KOL/2017[2010-11]Status: DisposedITAT Kolkata10 May 2024AY 2010-11

Bench: Shri Rajesh Kumar & Shri Sonjoy Sarma]

Section 115JSection 143(1)Section 37

…1223/Kol/2017 Assessment Year: 2010-11 & 2011-12 ITC Limited. of services by such non-resident agents were provided outside India. The Ld. A.R in defense of his arguments relied on the decision of Hon’ble Apex Court in the case of CIT vs. Toshoku Ltd. [1980] 125 ITR 525 (SC) . The Ld. A.R submitted that no part of the commission paid by the assessee accrued or arose or was deemed to accrue or arise to non-resident in India and therefore the same was not chargeable to tax in India and as such there was no obligation on the part of the assessee to deduct tax at source u/s 195 of the Act. The Ld. A.R also contended…