Hindustan Petroleum Corporation Ltd. v. ADIT

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The Tax Publishers2016 TaxPub(DT) 1696 (Mum-Trib) Hindustan Petroleum Corporation Limited v. ADIT INCOME TAX ACT, 1961 --Tax deduction at source--Under section 195Payment to non-resident supplier having no PE in India----Further, since assessee had made payment for BEDS work to non-resident entity and supplier did not have any PE in India, such payment would not be taxed in India and therefore, assessee was not liable to deduct tax at source.--Assessee company, under an agreement, made payment towards Basic Engineering Design Specification (BEDS) to American company to set up a plant. Designing work was not done in India and the payment was also made outside India. Assessee considered it as royalty paid and deducted tax thereon. First Appellate Authority considered the same to be for FTS as contemplated under Article12 of DTAA. *Held:* As the assessee had made payment for BEDS work to non-resident entity and the supplier did not have any PE in India, such payments would not be taxed in India. Therefore, the assessee was not liable to deduct tax at source on the same.The payment in question was neither held to be royalty or FTS as the assessee had purchased BEDS outrightly and which was to be considered as a capital asset. Income Tax Act, 1961, Section 195 *REFERRED :* FAVOUR : In assessee's favour A.Y. : IN THE ITAT, MUMBAI BENCH RAJENDRA, A.M. & RAM LAL NEGI, J.M. Hindustan Petroleum Corporation Ltd. v. ADIT ITA Nos. 7678, 7679, 7680 & 7681/Mum/2007 30 March, 2016 Petitioner by: Ajay Modi Respondent by: Arti Sathe. ORDER *Rajendra, A.M.* Challenging the orders dated 17-9-2007, of Commissioner (Appeals)-XXXIII, Mumbai, the assessee has filed the above mentioned appeals, originating from the orders, of the assessing officer's, passed under section 195(2) of the Act. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 1696 (Mum-Trib)

Hindustan Petroleum Corporation Limited v. ADIT

INCOME TAX ACT, 1961

--Tax deduction at source--Under section 195Payment to non-resident supplier having no PE in India----Further, since assessee had made payment for BEDS work to non-resident entity and supplier did not have any PE in India, such payment would not be taxed in India and therefore, assessee was not liable to deduct tax at source.--Assessee company, under an agreement, made payment towards Basic Engineering Design Specification (BEDS) to American company to set up a plant. Designing work was not done in India and the payment was also made outside India. Assessee considered it as royalty paid and deducted tax thereon. First Appellate Authority considered the same to be for FTS as contemplated under Article12 of DTAA. Held: As the assessee had made payment for BEDS work to non-resident entity and the supplier did not have any PE in India, such payments would not be taxed in India. Therefore, the assessee was not liable to deduct tax at source on the same.The payment in question was neither held to be royalty or FTS as the assessee had purchased BEDS outrightly and which was to be considered as a capital asset.

Income Tax Act, 1961, Section 195

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

IN THE ITAT, MUMBAI BENCH

RAJENDRA, A.M. & RAM LAL NEGI, J.M.

Hindustan Petroleum Corporation Ltd. v. ADIT

ITA Nos. 7678, 7679, 7680 & 7681/Mum/2007

30 March, 2016

Petitioner by: Ajay Modi

Respondent by: Arti Sathe.

ORDER

Rajendra, A.M.

Challenging the orders dated 17-9-2007, of Commissioner (Appeals)-XXXIII, Mumbai, the assessee has filed the above mentioned appeals, originating from the orders, of the assessing officer's, passed under section 195(2) of the Act.