IND TELESOFT P LTD Vs. STATE

JUDGEMENT

(1.) 1. None appears for the applicant. The applicant M/s Ind Telesoft (P) Ltd., Bangalore, a resident company, filed application under Section 245Q(1) of the IT Act, 1961 (for short the Act), seeking advance ruling of this authority on the following questions :

(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-resident entities for securing business from outside India. The following three outside agencies are:

(3.) NOTICE of the application was sent to the CIT-1, Bangalore, the jurisdictional CIT, for his comments. By his letter of 11th Oct., 2001, he submitted that the need for deduction of tax at source under Section 195 of the Act, would arise if the payment of commission to the non-resident agencies is chargeable to tax in India. Relying on Circular No. 23 of 23rd July, 1969 of the CBDT clarifying that where the non-resident agencies operated outside the country, no part of the income would arise in India and that when the payment was remitted directly abroad, it would not be held to have been received in India, He relies also on CBDT Circular No. 786 dt. 7th Feb., which states, inter alia, that no tax under Section 195 of the Act is deductible. He has conceded, relying upon the above-mentioned circulars of the CBDT, that no tax can be deducted at source on the payment made by the applicant to the aforementioned three non-resident companies.