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| The Tax Publishers2020 TaxPub(DT) 0758 (Jp-Trib) INCOME TAX ACT, 1961
Section 195
If payment made by assessee was not chargeable to tax in the hands of recipient then same was not liable for TDS merely because of Explanation to section 195 as it is a prerequisite condition for invoking provisions of section 195 that the payment is chargeable to tax in India in the hands of recipient. Since neither AO nor CIT(A) examined issue by considering relevant facts as well as respective DTAAs if any between India and the country of recipient/non-resident, therefore, in our considered opinion, this issue requires a proper verification and examination. Particularly when receipients had no PE in India, this issue required a proper verification and examination and was, therefore, remanded to CIT(A) for adjudication afresh.
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Tax deduction at source - Unders ection 195 - Payment to non-esident - AO not examined taxability of concerned payment in India--CIT(A) upheld disallownace under section 40(a)(i) relying on Explanation to section 195
Assessee made various payments to non-resident foreign entity/persons towards commission, advertisement fee, registration charges, etc. AO required assessee to explain as to why the amount paid should not be disallowed under section 40(a)(ia)/40(a)(i). Assessee contended that payments were not liable to TDS as same were not chargeable to tax in India in the hands of recipient as these payments did not fall in the ambit of income deemed to accrue or arise in India. Ao did not accept this and treated these payments as fee for technical services and consequently made the disallowance under section 40(a)(i). CIT(A) upheld disallowance relying on Explanation to section 195.Held: If payment made by assessee was not chargeable to tax in the hands of recipient then same was not liable for TDS merely because of Explanation to section 195 as it is a prerequisite condition for invoking provisions of section 195 that the payment is chargeable to tax in India in the hands of recipient. Since neither AO nor CIT(A) examined issue by considering relevant facts as well as respective DTAAs if any between India and the country of recipient/non-resident, therefore, in our considered opinion, this issue requires a proper verification and examination. Particularly when receipients had no PE in India, this issue required a proper verification and examination and was, therefore, remanded to CIT(A) for adjudication afresh.
REFERRED :
FAVOUR : Matter remanded.
A.Y. :
IN THE ITAT, JAIPUR BENCH
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