“TDS on commission”

TDS / TCSSection 194HSection 194H89 judgments

The decision most relied on for TDS on commission is CIT v. Toshoku Ltd. (125 ITR 525), cited in 270 judgments on BharatTax.

Leading authorities on TDS on commission

CIT v. Toshoku Ltd.

125 ITR 525 · 1980 · Supreme Court

270

citing judgments

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.

CIT v. Idea Cellular Ltd.

325 ITR 148 · 2010 · High Court

155

citing judgments

Discounts offered to distributors under a tightly controlled relationship constitute commission and are subject to tax deduction at source under Section 194H of the Income-tax Act.

CIT v. Faizan Shoes (P.) Ltd.

367 ITR 155 · 2014 · High Court

139

citing judgments

Disallowance under section 40(a)(i) for non-deduction of tax at source on export agency commission paid to a non-resident does not apply if the non-resident's income is not taxable in India under section 9(1), such as when the agent operates outside India without a permanent establishment or business connection in India.

State Lotteries & Ors. (2001) 249 ITR 186 and Ahmedabad Stamp Vendors Association v. Union of India

257 ITR 202 · 2002 · High Court

121

citing judgments

Supplementary commission forional or extra services does not fall within the ambit of Section 194H of the Income Tax Act, 1961. This may affect the applicability of certificates issued under Section 197.

Palam Gas Service v. CIT

394 ITR 300 · 2017 · Supreme Court

110

citing judgments

Disallowance under Section 40(a)(ia) for non-deduction of TDS is mandatory, applying even to amounts already paid and not merely 'payable', based on a purposive construction of the provision, irrespective of the timing of payment or liability.

Hindustan Coca Cola v. CIT

402 ITR 539 · 2018 · High Court

citing judgments

Discounts allowed by a business to grow its operations in a competitive market are acceptable and cannot be disallowed. Expenses incurred for business growth in a competitive world are not to be disallowed.

CIT(A) v. Eon Technology Pvt. Ltd.

343 ITR 366 · 2012 · High Court

citing judgments

Payments to a non-resident agent for services rendered outside India, where the agent has no permanent establishment (PE) or business connection in India, are not chargeable to tax in India. Consequently, there is no obligation to deduct tax at source under Section 195, and no disallowance under Section 40(a)(i) can be made.

Bharti Cellular Ltd. v. ACIT

354 ITR 507 · 2013 · High Court

citing judgments

The Calcutta High Court held that discounts given to distributors for procuring and retaining customers are considered commission, making them subject to TDS under Section 194H, and treating the assessee as being in default for non-deduction.

Judgments citing TDS on commission

Gramin Sewa Sahakari Samiti Maryadit, Champajhar, Raipur vs. Income Tax Officer-1(1), Raipur

ITA 88/RPR/2023[2017-18]Status: DisposedITAT Raipur24 May 2023AY 2017-18

Bench: Shri Ravish Sood

For Appellant: None (written submissions)For Respondent: Shri Piyush Tripathi, Sr. DR

Section 143(2)Section 143(3)Section 80PSection 80P(2)Section 80P(2)(a)Section 80P(2)(c)Section 80P(2)(d)

claim for deduction under Sec. 80P of Rs.2,95,216/- was declined a/w. disallowance of its claim for credit of the amount of TDS on commission received on paddy procurement business, as under: 4 Gramin Sewa Sahakari Samiti Maryadit ITA Nos. 87 to 89 / RPR/2023 Sl. No. Particulars Amount

Gramin Sewa Sahakari Samiti (Maryadit), Gaurbhat, Raipur vs. Income Tax Officer-1(2), Raipur

ITA 87/RPR/2023[2017-18]Status: DisposedITAT Raipur24 May 2023AY 2017-18

Bench: Shri Ravish Sood

For Appellant: None (written submissions)For Respondent: Shri Piyush Tripathi, Sr. DR

Section 143(2)Section 143(3)Section 80PSection 80P(2)Section 80P(2)(a)Section 80P(2)(c)Section 80P(2)(d)

Hari Shankar Singhania Estate, New Delhi vs. JCIT Spl. Range - 18, New Delhi

In the result, for statistical purposes the appeal of the assessee is partly allowed

ITA 4176/DEL/2019[2014-15]Status: DisposedITAT Delhi09 Jan 2023AY 2014-15

Bench: Shri N.K. Billaiya & Ms. Astha Chandraasstt. Year: 2014-15 Hari Shankar Singhania Estate, Vs. Jcit, Patroit House, 3, Special Range-18 Bahadur Shah Zafar Marg, New Delhi. New Delhi – 110 002 Pan Aaaah9163Q (Appellant) (Respondent)

For Appellant: Shri V.P. Gupta, AdvocateFor Respondent: Shri M. Baranwal, CIT(DR)

Section 159Section 168Section 194J

case was selected for scrutiny under CASS. During assessment proceedings, the Ld. Assessing Officer (“AO”) observed that the assessee has claimed TDS on commission income of Rs. 1,50,00,000/- deducted by deductor companies, namely JKLC and JK Tyre as per Form 26AS. However, the said commission income

Sri Srinivasa Vinay Babu, Bangalore vs. Income Tax Officer, Ward- 2(2)(2), Bangalore

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 1662/BANG/2019[2012-13]Status: DisposedITAT Bangalore28 Nov 2022AY 2012-13

Bench: Shri N.V. Vasudevan & Ms. Padmavathy S.Shri Srinivasa Vinay Babu Vs Income Tax Officer-2(2)(2) No. 927/17, 18Th A Main Road 1St Floor, Bmtc Building 5Th Block, Rajaji Nagar 80 Feet Road, Koramangala Bengaluru 560095 Bangalore 560010 Pan – Azups7151D (Appellant) (Respondent) Assessee By: None Revenue By: Shri K.R. Narayana, Addl. Cit-Dr Date Of Hearing: 24/11/2022 Date Of Pronouncement: 28/11/2022 O R D E R Per: Padmavathy, A.M.

For Appellant: NoneFor Respondent: Shri K.R. Narayana, Addl. CIT-DR

Section 40

accounting. The AO further made disallowance under Section 40(a)(ia) of the Income Tax Act, 1961 (the Act) for non deduction of TDS on commission payment of Rs.1,86,42,864/- and an 2 Shri Srinivasa Vinay Babu adhoc disallowance of Rs.1,45,00,000/- towards other expenses

M/S Infosys Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Circle-3(1)(1), Bangalore

In the result, the appeal filed by the assessee stands partly allowed

ITA 718/BANG/2017[2012-13]Status: DisposedITAT Bangalore28 Nov 2022AY 2012-13

Bench: Shri Chandra Poojaria & Smt. Beena Pillaiassessment Appeal No. Appellant Respondent Year M/S. Infosys Ltd., The Assistant Electronic City, Commissioner It(Tp)A No. Hosur Road, Of Income Tax, 2012-13 718/Bang/2017 Bangalore – 560 Circle – 100. 3(1)(1), Pan: Bangalore. Aaaci4798L : Shri Padamchand Khincha, Assessee By Ca : Shri K.V. Arvind & Shri Dilip, Revenue By Standing Counsels For Dept. Date Of Hearing : 15-09-2022 Date Of Pronouncement : 28-11-2022 Order Per Beena Pillaipresent Appeal Arises Out Of Final Assessment Order Dated 28/02/2017 Passed By The Ld.Acit, Circle – 3(1)(1), Bangalore For A.Y. 2012-13 On Following Grounds Of Appeal: General & Legal Grounds 1. The Order Passed By The Learned Assessing Officer & The Directions Of Hon’Ble Drp To The Extent Prejudicial To The Appellant Is Bad In Law & Liable To Be Quashed. Grounds On Denial Of Deduction Claimed Under Section 10Aa In Respect Of 4 Sez Units Viz., Chennai – Unit 1, Chandigarh, Mangalore - Unit 1 & Pune Unit 1 2. The Learned Assessing Officer Has Erred In Denying Deduction Claimed Under Section 10Aa In The Return Of Income Totally Amounting To Rs. 2227,82,65,630 In Respect

Section 10ASection 14ASection 2Section 2(24)Section 40

case of CIT v Samsung Electronics Co Ltd., reported in (2010) 320 ITR 209 held that, the assessee should have either made TDS on commission paid or should have obtained an exemption certificate from the IT Dept. It was held that, in the absence of action taken on both these

Tata Consultancy Services Ltd, Mumbai vs. Asst CIT Ltu-1, Mumbai

In the result, appeal by the assessee is partly allowed for statistical purpose

ITA 1650/MUM/2016[2011-12]Status: DisposedITAT Mumbai06 Apr 2022AY 2011-12

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Porus Kaka, Sr. AdvocateFor Respondent: Ms. Vatsalaa Jha, CIT–DR

Section 115JSection 143(3)Section 144C(1)Section 144C(13)Section 144C(5)Section 2(43)Section 37Section 40Section 90Section 91

outside India to non-resident agents operating outside India. During the assessment proceedings, the Assessing Officer noted that the assessee has not deducted TDS on commission paid to non- residents under section 195 read with section 5 and 9 of the Act. Vide draft assessment order dated 16.02.2015, the Assessing

Manish Gupta, Meerut vs. DCIT, Central Circle, Meerut

In the result, the appeal of the assessee is partly allowed

ITA 8132/DEL/2018[2011-12]Status: DisposedITAT Delhi09 Feb 2022AY 2011-12

Bench: Shri N.K. Billaiya & Shri Amit Shukla[A.Y. 2011-12]

For Appellant: Shri Rajkumar, CAFor Respondent: Shri Kipgen, CIT-DR

Ajnara India Ltd showing payment of commission to the HUF. Page 29 is the TDS Certificate issued by Ajnara India Ltd showing TDS on commission paid to HUF of the assessee. Page 31 is copy of bank account of the HUF of the assessee with Oriental Bank of Commerce, wherein

ACIT, Circle- 10(2), New Delhi vs. Groz Engineering Tools Pvt. Ltd., New Delhi

Appeals of the Department stand dismissed

ITA 3895/DEL/2017[2013-14]Status: DisposedITAT Delhi13 Sept 2021AY 2013-14

Section 143(3)Section 40Section 40a

Rs.34,54,190/-, disallowance u/s 40a(ia) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) on account of non-deduction of TDS from commission payment amounting to Rs.2,71,47,499/-, addition on account of difference between income returned and income as per Form 26AS amounting to Rs.6 ... deleting the addition of ACIT vs. M/s Groz Engineering Tools Pvt. Ltd. Rs.1,56,68,770/- made on account of ‘non-deduction of TDS on commission payment made to foreign companies u/s 40(a)(ia)’ vide order u/s 143(3) of the I.T. Act 1961 passed by the DCIT, Circle

ACIT, Circle- 10(2), New Delhi vs. Groz Engineering Tools Pvt. Ltd., New Delhi

Appeals of the Department stand dismissed

ITA 3894/DEL/2017[2011-12]Status: DisposedITAT Delhi13 Sept 2021AY 2011-12

Section 143(3)Section 40Section 40a