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| The Tax Publishers2020 TaxPub(DT) 3818 (Mad-HC) INCOME TAX ACT, 1961
Section 40(a)(ia) Section 90
Where issue arose as to whether assessee was liable for disallowance under section 40(1)(ia) by taking into consideration the provisions of section 90 read with the DTAA between India and USA, considering that contention of assessee that as per section 90, it was not liable to deduct tax at source as it did not make available any technical knowledge, was raised for first time before Court, matter was remanded back to AO for decision afresh.
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Business disallowance under section 40(a)(ia) - As per section 90 assessee not liable to deduct tax at source - Issue raised for first time - Remand of matter
Assessee was a company engaged in business of providing micro-finance. Issue arose as to whether assessee was eligible for disallowance under section 40(1)(ia) of IT Act, 1961 by taking into consideration the provisions of section 90 of the IT Act, 1961 read with the Double Taxation Avoidance Agreement between India and USA. Held: Admittedly, issue relating to section 90 read with DTAA between India and USA was not raised before AO or CIT(A) or before Tribunal but for first time, assessee raised the issue before Court and the said issue was also raised in the substantial questions of law. Contention of assessee was that as per section 90, assessee was not liable to deduct tax at source as it did not make available any technical knowledge and therefore, the payment need not be treated as Fees for Technical Services. This was a fit case for remitting the matter back to AO for considering the issue by taking into account the claim made by the assessee.
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2013-14
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