Dismissing the appeal of the revenue the Tribunal held that commission was in nature of business income for recipient of income/payee/non-residents and was not taxable in India in terms of section 9(1)(i) in absence of business connection in India. Accordingly the assessee was not liable for short deduction of tax at source and, therefore, disallowance under section 40(a)(ia) was not permissible. (AY. 2011-12, 2012-13)
DCIT v. DML Exim (P.) Ltd. (2020) 184 ITD 432 (Rajkot)(Trib.)
S. 40(a)(ia) : Amounts not deductible-Deduction at source-Commission to foreign parties-Short deduction of tax at source-No disallowance can be made-Model OECD Convention-Art. 7. [S. 9(1)(i)]