Section 5(2), read with section 9, of the Act – Agency commission received by non resident outside India, for services rendered outside India, is not taxable in India.
Geeta Jani | Dhishat B. Mehta Chartered Accountants
2.TS-84-ITAT-2019 (Mum) Fox International
Channel Asia Pacific Ltd. vs. DCITA.Y.: 2010-11 Date of Order: 15th
Section 5(2), read with section 9, of the
Act – Agency commission received by non resident outside India, for services
rendered outside India, is not taxable in India.
Taxpayer, a company resident in Hong Kong,
was a part of a group of companies, and was engaged in distribution of
satellite television channels and sale of advertisement air time for the
channel companies at global level.
During the year under consideration, Taxpayer
received income in the nature of agency commission for distribution of
television channels and sale of advertisement air time as an agent of the
channel companies. Having noted that the Taxpayer has entered into an
international transaction with its associated enterprises (AEs), AO made a
reference to the Transfer Pricing Officer (TPO) for the determination of the
arm’s length price (ALP).
The TPO while computing ALP noted that out
of the global commission received by the Taxpayer from the overseas channel
companies, commission fee received towards the services rendered outside India
was not offered to tax in India and only the commission fees for services
rendered within India was offered to tax in India. The TPO held that the entire
income including for services rendered outside India was taxable in India and
hence made transfer pricing adjustment to the total income of the Taxpayer. In
pursuance to the ALP determined by the TPO, the AO passed a draft assessment
order adding the transfer pricing adjustment to the income of the