The assessee, a public financial institution carrying on general insurance business under relevant laws and IRDAI regulations, had paid an amount as commission to non-resident agents. The Assessing Officer disallowed this amount under S. 40(a)(ia) for non-dedication of TDS under S. 195. However, the Commissioner (Appeals) deleted the disallowance on appeal.

The Tribunal held that the non-resident agents had no permanent establishment or business activities in India, and the commissions were taxable only in the agents’ foreign countries. Therefore, s. 195 did not apply.