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| The Tax Publishers2020 TaxPub(DT) 2400 (Del-Trib) INCOME TAX ACT, 1961
Section 195 Section 90
As amended DTAA was subsequent to the date of transaction it did not apply to the facts of case and, therefore, income of the Cyprus resident seller was not chargeable to tax in India, as per double taxation avoidance agreement prevailing at the time and accordingly, no tax was required to be withheld by assessee from payment made to Cyprus resident towards ITES.
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Tax deduction at source - Under section 195 - Capital gain arisen to non-resident entity on account of sale of shares to assessee - Income of seller not taxable in India in view of prevailing DTAA--Amendment of DTAA after transaction took place
Assessee was, an Indian company engaged in the business of providing information technology enabled services. It filed its return of income on 15-10-2010 of loss of Rs. 25,45,732. During the year Vectex Limited, Cyprus Company has sold shares of Unitech Info Park Ltd. to assessee, an Indian company. AO held that capital gain arising in the hands of Cyprus Company was liable to be taxed in India according to section 5(2) and section 9(1) and, therefore, assessee company was required to deduct tax while making payments to Vectxex Limited under section 195 in view of new DTAA between India and Cyprus. Held: Income of the Cyprus resident seller was not chargeable to tax in India, as per double taxation avoidance agreement prevailing at the time. When transaction was entered into new double taxation avoidance agreement has come into force much letter then the transaction took the place. In the new DTAA there is a provision as per article 13(4) wherein now such transaction, probably is chargeable to tax in India. However, as amended DTAA was subsequent to the date of transaction it did not apply to the facts of case and, therefore, no tax was required to be withheld by assessee.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
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