Payment of commission to non resident overseas do not attracts the provision of section 194H

Last updated: 06 September 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Facts indicate that the assessee is a partnership firm of two partners and doing the business of export of hardware items. The assessee purchases raw material and after assembling and doing the job work, the same are exported to foreign countries and mainly to New Zealand. During the course of assessment proceedings, the Assessing Officer found that the assessee has claimed the commission payment of Rs.29,06,352/- to a foreign party, namely, M/s AV International, New Zealand for the sale of exported goods in that country. The assessee did not make the TDS u/s 194H on the ground that no TDS is required to be made to a foreign party as no services have been rendered in India. The Assessing Officer did not accept the explanation of the assessee and has disallowed the commission payment u/s 40(a)(ia) of the Act for non-deduction of TDS.

Citation :
ACIT, circle 29(1), New Delhi. (Appellant) Vs. Nidhi Exports, 2751/2, Hamilton Road, Morigate, New Delhi. (PAN/GIR No.AACFN0462H) (Respondent)