Madras High Court: No TDS As Sales Commission Could Not Be Regarded As Technical Services

Madras High Court: No TDS As Sales Commission Could Not Be Regarded As Technical Services

The Court found the matter to be purely factual and dealt with the core issue involving for what purpose the payments were affected by the Respondent

The Madras High Court upheld the order of the Income Tax Appellate Tribunal by confirming that there was no need to deduct tax at source as the payments made to the non-residents were sales commission and could not be regarded as if for technical services.

The Division Bench of the High Court of Madras, comprising Justices T. S. Sivagnanam and Sathi Kumar Sukumara Kurup, dealt with this matter titled Commissioner of Income Tax v M/s Wheels India Limited.

The Appellant – Commissioner of Income Tax had preferred this tax case appeal against the order of the Income Tax Appellate Tribunal wherein it deleted the disallowance u/S 40(a)(i) of the Income Tax Act, 1961 in respect of payments of export sales commission and service charges made to non-residents without deduction of tax at source.

The Appellate Tribunal had agreed with the Respondent – Assessee that what was paid by the Respondent – Assessee to the non-residents was sales commission and could not be regarded as if for technical services.

The Court found the matter to be purely factual and dealt with the core issue involving as to for what purpose the payments were affected by the Respondent – Assessee to the non-residents and whether the Respondent – Assessee was required to deduct the tax at source.

The Respondent – Assessee submitted multiple judgments to contend that sourcing orders abroad, for which payments had been made directly to the non-residents abroad, did not involve any technical knowledge.

The Court could not find any grounds to interfere with the order passed by the Appellate Tribunal, especially when no question of law or substantial question of law arose for consideration and thus, the appeal was dismissed.