April 2019

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. DCIT  A.Y.: 2010-11 Date of Order: 15th February, 2019

 

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.


FACTS

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

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