2020 (7) TMI 156 - AT - Income Tax

Disallowance u/s 40(a)(i) - Selling Expenses payments to non-resident agents - HELD THAT - It is not in dispute that the issue is same as have already been considered in earlier year by the Tribunal 2017 (9) TMI 820 - ITAT DELHI . The parties are also same. 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, assessee is not required to deduct tax at source while making payments in question. A.O. in the assessment order has also made disallowance since in earlier year 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 assessee for the A.Y. 2010-2011, set aside the Orders of the authorities below and delete the addition. - Decided in favour of assessee.

Summary

Issues:
Challenge to addition of expenses in the name of commission to non-resident agents without TDS deduction.

Analysis:
The appeal was against the addition of expenses amounting to ?13,67,739 debited as commission to non-resident agents without TDS deduction. The Assessing Officer (A.O.) disallowed the amount under section 40(a)(i) of the Income Tax Act as no TDS was deducted. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the A.O.'s decision. The Assessee argued that a similar issue was considered by ITAT in a previous year where disallowance was deleted as the agents were abroad and services were rendered outside India. The Assessee contended that since the facts were identical to the previous year, the disallowance should be deleted.

The A.O. noted that the issue and the parties involved were the same as in the previous year. The Tribunal had previously held that the Assessee was not required to deduct tax at source for payments made to agents with offices abroad and services rendered outside India. The A.O. made the disallowance based on the lack of TDS deduction in the previous year. The Dispute Resolution (D.R.) did not dispute the similarity of the issue and the disallowance from the previous year. The D.R. relied on the Orders of the lower authorities and a judgment of the Supreme Court. The Tribunal, considering the agreement and material on record, found that no TDS deduction was required for the payments made to non-resident agents. Therefore, the Tribunal set aside the Orders of the lower authorities and deleted the addition based on the precedent of the previous year.

In conclusion, the Tribunal allowed the appeal of the Assessee based on the precedent set in a previous year's case, where it was established that no TDS deduction was required for payments made to non-resident agents with offices abroad and services rendered outside India.