Law:

Section:

Section 195 of the Income-tax Act, 1961 - Deduction of tax at source - Payment to non-resident - Whether tax is deductible at source under section 195 in respect of transactions relating to commission and retainer fees payable to non-resident having no office or business operation in India, on export earnings - Held, no RULING Syed Shah Mohammed Quadri, Chairman. - None appears for the applicant. The applicant M/s. Ind Telesoft Private Limited, Bangalore, a resident company, filed application under section 245Q(1) of the Income-tax Act, 1961 (for short the Act), seeking advance ruling of this authority on the following questions :- "Advance ruling is required for, whether tax at source is to be deducted for the following type of transactions : ( i)Commission payable to abovesaid non-residents on export earnings; and (ii )Retainer fees payable to abovesaid non-residents apart from commission payable on export earnings". 2. The applicant states that it is engaged in the business of providing software solutions for the telecom industry. It entered into agreement with three non-residents entities for securing business from outside India. The following three outside agencies are : (i )Flexifinity S.A.R.L., France (ii )Hi Tech Ottawa.com, Canada (iii )TeleSoft Inc., USA 3. The applicant agreed to pay retainer fees and commission to the first two aforementioned companies and only commission to the third company who were staying outside India. It added that none of them have any office or any business operation in India. The applicant company is however earning foreign exchange by export of developed software. After receipt of foreign exchange in India, the non-resident companies would be paid their commission and fees. 4. Notice of the application was sent to the Commissioner of Income-tax-I, Bangalore, the Jurisdictional Commissioner, for his comments. By his letter of October 11, 2001, he submitted that the need for deduction of tax at source under section…

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