The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the payment towards foreign agency commission is not subject to tax deduction at source (TDS) under the provisions of the Income Tax Act, 1961.
The assessee was aggrieved with the order of the Assessing Officer wherein it was noticed that the assessee had debited expenses in the name of the commission to non-resident other than a company or a foreign company amounting to Rs.13,67,739/-. The Assessing Officer held that the expenses made in foreign agency commission are of the same nature as last year and no TDS has been deducted by the assessee, therefore, the amount in question was disallowed under section 40(a)(i) of the I.T. Act.
On the first appeal, the first appellate authority dismissed the appeal of the assessee.
Considering the second appeal, the Tribunal observed that it is not in dispute that the issue is the same as having already been considered in the earlier years by the Tribunal. The parties are also the same.
“The Tribunal examined the issue in the light of agreement and material on record and found that the agent had their base situated in Abroad and moreover services were also rendered by them outside. Therefore, the assessee is not required to deduct tax at source while making payments in question. The A.O. in the assessment order has also made disallowance since in earlier years also of the same issue and no TDS have been deducted. Therefore, the facts being identical, no disallowance is required in the matter. We, therefore, following the Order of the Tribunal in the case of the assessee for the A.Y. 2010-2011, set aside the Orders of the authorities below and delete the addition,” the Tribunal said.
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