Export Commission Paid To Foreign Agent For Arranging Export Sales Not Taxable As 'Fee For Technical Services'

The Delhi High Court in case of DIT v Panalfa Autoelektrik Ltd: 49 taxmann.com 412, held that export commission for arranging export sales could not be considered as consideration for providing managerial, consultancy or technical services, and therefore would not be taxable in India.

In this case, the taxpayer made an application for remittance of export commission to a foreign company, incorporated in Liechenstein, which was engaged in procuring export orders for the taxpayer outside India. The contention of the taxpayer was that the payment was not in the nature of fees for technical services under the domestic tax law and therefore no tax was required to be deducted at source in India.