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sec 195

student (WORKING) (757 Points)

14 May 2011

in case of rajiv malhotra [AAR] it was concluded tht Commission is payable to the
agent only after the exhibitor participates in the show/exhibition
in India and makes full and final payment due to the applicant in
India—Thus, the source of income of the agent is the
participation by the exhibitors in the exhibition in India-taxable -tds u/s 195

but my question is if such NR agent has to receive full pymt outside india only & sent such proceeds to india

then the applicant will sent him commission based on such proceeds .

in above case also Nr agent is earning income b/c of exhibition in india even if participants pay to nr agent & then nr agent sent the money to the applicant in india

whether am i correct on above issue

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2 Replies

Suresh Prasad (www.aubsp.com) (15630 Points)
Replied 14 May 2011

In case of Shri Rajiv Malhotra the fact was :

Non resident would be rendering services outside India and also getting payment outside India, whether he will be liable to income tax in India on account of his being agent of resident in India ????????

In case answer to the above is negative, whether T.D.S. is to be deducted from payment which will be remitted by resident to the non resident agent.

But your question is if such NR agent has to receive full pymt outside india only & sent such proceeds to india.

Are not liable to be taxed in India either going by the provisions of the Income-tax Act or the Double Taxation Avoidance Agreement (DTAA).

Attached File : 279585 715317 aar no 802 of 2009.pdf downloaded: 139 times

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student (WORKING) (757 Points)
Replied 15 May 2011

but as per the ruling

Income deemed to accrue or arise in India—Income from source
in India—Commission payable to non-resident agent—Applicant
intending to organize an international trade exhibition in India—
All business operations for holding the show are to be carried on
in India—Non-resident agent appointed to furnish information
about terms and conditions to potential foreign participants and
for booking space in exhibition—Commission is payable to the
agent only after the exhibitor participates in the show/exhibition
in India and makes full and final payment due to the applicant in
India—Thus, the source of income of the agent is the
participation by the exhibitors in the exhibition in India—
Therefore, commission income would be taxable under the Act in
view of specific provisions of s. 5(2)(b) —Facts that
the agent is to render services abroad and that the commission is
to be remitted to it abroad are wholly irrelevant for the purpose

of determining the situs of its income—Thus, tax is required to be
deducted at source under s. 195 from payments, which will be
remitted by the applicant to the non-resident agent

tax wil be deducted b/c income is recd by NR b/c of exhibition in india [source of income is in india even if it is recd by NR agent & then proceeds [after deducting commision] r sent to india OR proceeds r collected in india & then commiison is remitted to him] .As per sec 9

The following incomes shall be deemed to accrue or arise in India :—
(i) all income accruing or arising, whether directly or indirectly, through
or from any business connection in India, or through or from any
property in India, or through or from any asset or source of income
in India, or through the transfer of a capital asset situate in
India.