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IN THE INCOME TAX APPELLATE TRIBUNAL

“B” BENCH, AHMEDABAD

BEFORE SHRI TR SENTHIL KUMAR, JUDICIAL MEMBER AND

SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER

ITA No. 1437/AHD/2024

Assessment Years:2018-19

Assistant Commissioner of Ms. Jagson Colorchem

Income Tax, Circle – 2(1)(1), Limited,

Ahmedabad - 380054 Plot No. 5601/4,

Phase – II, GIDS Estate

Vs.

Vatva, Ahmedabad,

Gujarat - 382445

[PAN – AAACJ7664C]

(Appellant) (Respondent)

Assessee by Shri Karan Shah, A.R.

Revenue by Shri Abhijit, Sr. D.R

Date of Hearing 20.01.2026

Date of Pronouncement 03.02.2026

O R D E R

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Revenue against the order of National

Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’]

dated 06.06.2024 for the Assessment Year (A.Y.) 2018-19 in the

proceeding u/s 143(3) of the Income Tax Act.

2. The brief facts of the case are that the assessee had filed its return

of income for the A.Y. 2018-19 on 05.10.2018 declaring total income of

Rs. 12,69,39,970/-. The case of assessee was selected for limited scrutiny

ITA No. 1437/Ahd/2024

ACIT vs. Ms. Jagson colorchem limited, AY- 2018-19

2

under CASS and one of the issue was “compliance with TDS provisions

on payments outside India”. In the course of assessment, the AO found

that the assessee had paid commission, royalty or professional fee

outside India on which no TDS was deducted. According to the assessee,

commission payment of Rs.5,63,28,206/- was made for services rendered

outside India, which was not liable to tax within the country and, therefore,

no TDS was made thereon. However, the AO did not agree with the

submissions of the assessee. He, therefore, disallowed the commission

of Rs.5,63,28,206/- under the provision of section 40(a)(i) of the Act, for

non-deduction of TDS thereon.

3. Aggrieved with the order of the AO the assessee had filed an appeal

before the first appellate authority, which was decided by the Ld. CIT(A)

vide the impugned order and the appeal of the assessee was allowed.

4. Now the Revenue is in appeal before us. The following grounds

have been taken in this appeal:

1. Whether on the facts and in the circumstances of the case and in law,

the Ld. CIT(A) has erred in deleting the addition of Rs. 5,63,28,206/- u/s

40(a)(i) of the Act, on account of non-deduction of RDS on commission

payment which includes provision for commission, without appreciating

the facts of the case.

2. The appellant craves leave to amend or after any ground or add a new

ground, which may be necessary.

3. It is therefore, prayed that the order of Ld. CIT(A) may be set aside and

that of the Assessing Officer be restored.

ITA No. 1437/Ahd/2024

ACIT vs. Ms. Jagson colorchem limited, AY- 2018-19

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5. Shri Abhijit, the ld. Sr. DR submitted that there is no dispute to the

fact that that assessee did not deduct TDS on commission of

Rs.5,63,28,206/- paid to foreign agents. He submitted that in view of this

default, the provision of section 40(a)(i) of the Act was squarely applicable.

The ld. Sr. DR relied upon the decision of Hon’ble Supreme Court in the

case of Transmission Corporation of AP Limited (105 Taxmann 742)(SC)

in this regard.

6. Per contra, Shri Karan Shah, the Ld. AR of the assessee submitted

that the decision of Hon’ble Supreme Court in the case of Transmission

Corporation of AP Limited (supra) was on completely different facts. He

submitted that identical issue was involved in assessee’s own case in A.Y.

2013-14 which was decided by the Co-ordinate bench of this Tribunal in

ITA No. 1112/Ahd/2017 dated 08.02.2019 and relief was allowed to the

assessee. The ld. AR also relied upon the decision of the Supreme Court

in the case of Vedanta Limited (146 Taxmann.com 34) (SC). The ld. A.R

submitted that the assessee was no liable to deduct TDS on commission

payments to the foreign agents, as the services were rendered outside

India and no part of income had arisen in India. Under the circumstances,

when the assessee was not liable to deduct TDS u/s 195 of the Act, no

disal