FOR DIAMOND INDUSTRIES

In an order that will have a bearing on hundreds of diamond cutting and polishing firms in the country, the Income-Tax Appellate Tribunal (ITAT) has held that tax is not payable in India for commissions paid abroad at the time of acquiring rough diamonds. In a recent case, Mumbai-based polished diamond exporter Kirtilal Kalidas had imported rough diamonds from UK-based Diamond Trading Company after availing the service of another UK-based entity Bonas & Co. Kirtilal Kalidas had paid Rs 1.47 crore to Bonas & Co as a commission. However, no tax was deducted while making this payment. The income-tax department had later held that tax should have been deducted from the commission paid to the non-resident.
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