Decision that no withholding tax obligation if non-resident not chargeable to tax in India

The Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 6 March 2009 in the case of Deputy Commissioner of Income Tax v. Venkat Shoes Pvt. Ltd. (2009 TIOL 241-ITAT-MAD) on the need to approach the Tax Authorities for a withholding tax order when making payments to a non-resident who is not chargeable to tax in India.

(a) Facts. The Taxpayer (i.e. Venkat Shoes Pvt. Ltd.) manufactured and exported shoe parts, and had paid commissions to an unrelated non…