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| The Tax Publishers2020 TaxPub(DT) 5235 (Bang-Trib) INCOME TAX ACT, 1961
Section 195 Section 9(1)(vi)(b)
Where the royalty was paid for the purposes of business carried on outside India than to royalty income would not be deemed to accrue or arise in India. As a consequence no tax was deductable on such payment.
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Tax deduction at source - Under section 195 - Payment of subscription charges in resepct of business carried on overseas -
Assessee company, engaged in the business of Global Technical, implementation and service opportunities in Identity and Access Management Solutions, claimed deduction of subscription charges paid to non-resident. AO treated the payment as royalty and disallowed deduction for want of TDS under section 195. Assessee pleaded that USA branch was carrying on business separately and subscription services were exclusively used by it and, therefore, concerned payment was not liable to TDS. Held: In terms of exceptions provided under section 9(1)(vi)(b), if any royalty is paid for the purposes of business carried on outside India or for the purposes of making or earning any income from any source outside India, then royalty income would not be deeemd to accrue or arise in India. Accordingly, matter was remanded back to AO for examining applicability of said exception.
REFERRED : Wipro Ltd. (IT(TP)A No. 99/Bang/2014, dated 5-10-2020) : 2020 TaxPub(DT) 4218 (Bang-Trib).
FAVOUR : Matter remanded.
A.Y. : 2015-16
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