| COURT: | ITAT Agra |
| CORAM: | A. D. Jain (JM), Mitha Lal Meena (AM) |
| SECTION(S): | 195, 40(a)(i), 5, 9 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | commission, foreign agents, TDS deduction |
| COUNSEL: | Manoj Khurana |
| DATE: | April 11, 2018 (Date of pronouncement) |
| DATE: | April 19, 2018 (Date of publication) |
| AY: | 2010-11, 2011-12 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 9(1)(i)/ 40(a)(i): Entire law on whether commission paid by an Indian entity to foreign agents can be said to accrue in India and whether the assessee is obliged to deduct TDS thereon u/s 195 explained. All relevant judgements and CBDT Circulars Nos.7 dated 22.10.2009, 23 dated 23 July 1969, 163 dated 29th May 1975 and 786 dated 7th February 2000 considered | |
It is not disputed that that the withdrawal of the circulars No. 23 and 786 has been made on 22.10.2009 vide CBDT Circular No. 7 of 2009 and mere withdrawal of the circular does not negate the principles of income deemed to accrue or arise in India or outside India. The CBDT has not stated that any part of the circulars is contrary to law or that the circulars were wrongly issued or that the law has undergone changes holding their withdrawal. Thus, in respect of cases, which directly follow with the situations covered by the circulars, the liability to tax should continue to be in accordance with section 9 of the Act and its intent. The relevant sections, namely section 5(2) and section 9 of the Income-tax Act, 1961 not having undergone any change in this regard, the clarification in Circular No. 23 still prevails even after the withdrawal. No tax is therefore deductible under section 195 and consequently, the expenditure on export commission payable to a non-resident for services rendered outside India is not liable for withholding tax
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