| |
| The Tax Publishers2020 TaxPub(DT) 2879 (Del-Trib) INCOME TAX ACT, 1961
Section 40(a)(ia)
Where transactions of sale and purchase transaction of spare parts, raw material, capital goods and export commission of assessee with its AE were found at rm's length by TPO, there could be no further profit attributable to AE even if same had permanent establishment in India and, therefore, no disallowance under section 40(a)(i) could be made for want of TDS.
|
Business disallowance under section 40(a)(ia) - Non-deduction of tax at source - Payments made to non-resident AE for purchase of raw material, components, etc. - AE alleged to have PE in India--Payment made to AE found as at arm's length by TPO
Assessee-company a subsidiary of M/s. Honda Motor Company Limited, Japan (HMJ) was into the business of manufacture and sale of premium segment passenger cars in India and outside India. It claimed deduction of payments made to HMJ on account of purchase transaction of spare parts, raw material, capital goods and export commission. AO made disallowance in terms of section 40(a)(i) for non-deduction of tax on payments made to HMJ and other AEs under section 195 holding that such amounts were chargeable to tax in the hands of HMJ/AEs as these entities had permanent establishment (PE) and business connection in India. Held: Once transactions of sale and purchase transaction of spare parts, raw material, capital goods and export commission of assessee with its AE (including Honda Motor, Japan) were found at arm's length by TPO, there could be no further profit attributable to HMJ/AE even if same had permanent establishment in India and, therefore, no disallowance under section 40(a)(i) could be made.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT DELHI 'A' BENCH
 SUBSCRIBE FOR FULL CONTENT
|