Neither sec. 194C nor sec. 195 attracted if sums paid to NR outside India for services rendered outside India
The Hon’ble Delhi Tribunal (Bench “B”) has held that no TDS is deducted from the payments to Non-Residents when the services are rendered outside India. In the instant case, it is held that where assessee paid freight charges to foreign parties outside India for rendering services abroad, income did not accrue or arise in India and, thus, assessee was not liable to deduct tax at source while making said payments.  40 taxmann.com 310 (Delhi – Trib.) Deputy Commissioner of Income-tax – Circle-3(1), New Delhi v. Chandabh Impex (P.) Ltd.
The summarized analysis of the judgement is reproduced below;
I. Section 9, read with sections 194C and 195, of the Income-tax Act, 1961 – Income Deemed to accrue or arise in India [Business operations – Payments made abroad for services rendered abroad] – Assessment year 2009-10 – During relevant year assessee made payments of freight, inspection and testing charges to foreign parties without deducting tax at source – Assessee’s case was that since services were rendered outside India, no TDS was required to be deducted – Assessing Officer, however, held that assessee exported about 40 per cent goods from India and freight was paid for those services as such section 194C was attracted – Commissioner (Appeals) noted that neither freight nor inspection charges were paid by assessee company for any services rendered in India nor payments were made to foreign parties in India and, therefore, provisions of section 194C or section 195 were not applicable – Accordingly, disallowance made by Assessing Officer was deleted – Whether since finding of fact recorded by Commissioner (Appeals) was not assailed by bringing any cogent evidence on record, same was to be upheld – Held, yes [Para 9] [In favour of assessee]