No TDS on sales commission paid to non-residents for services rendered outside India

Last updated: 21 April 2021

Court :
ITAT, Jaipur

Brief :
The Hon'ble ITAT, Jaipur in Modern Threads India Limited v. ACIT (Income Tax Appeal Nos. 198/JP/2019 and 199/JP/2019 decided on February 15, 2021) has held that payment of sales commission by the assessee to non-resident agents for the services rendered outside India will not fall in the category of the income received or deemed to be received in India as well as accrues or arises or is deemed to accrue or arise in India. Hence, there will be no liability to deduct tax at source ('TDS') under Section 195(1) of the Income Tax Act, 1961 ('IT Act') and the provisions of Section 40(a)(i) of the IT Act that is disallowance of such commission cannot be invoked.

Citation :
Modern Threads India Limited v. ACIT (Income Tax Appeal Nos. 198/JP/2019 and 199/JP/2019 decided on February 15, 2021)