The assessee made payments of commission in foreign currency to non-resident parties, without deducting tax at source under section 195 on such payments. The assessee contended that these payments were made to the non-residents operating overseas who did not have any presence in India and there was no need to deduct tax at source on such payments. The AO was of the view that since the services were rendered in relation to the assessee’s business carried out in India, it was liable to be taxed in India and accordingly he held that the assessee was under obligation to deduct tax at source on such payments, failing which he disallowed these expenses claimed. The Commissioner (Appeals) upheld the order of the AO. On appeal for this issue, the Tribunal reversed the order of the Commissioner (Appeals) on the ground that in the absence of any activity in India by a non-resident commission agent, the commission did not accrue or arise in India and was not taxable in India. Therefore, it was held that the assessee was not under any obligation to deduct tax at source under section 195 of the Act. (AY. 2010-11, 2011-12)