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2015 (3) TMI 876 - ITAT CHENNAIDisallowance u/s 40(a)(i) - CIT(A) deleted disallowance - reopening of assessment - assessee had not deducted TDS u/s 195 as paid a sum as service charges rendered in Qatar for its Nigerian projects - Held that:- The CIT(A) has held that the payments in question are ‘fee for technical services’ and they are covered by exclusion u/s 9(1)(vii) of the Act with reference to the case law of Ajapa Integrated Project Management Consultant Pvt. Ltd.(2012 (6) TMI 404 - ITAT CHENNAI ). The Revenue’s plea that its appeal is pending u/s 260A of the Act does not point any distinction on facts. So, there is no ground to adopt a different approach in the present case. The Revenue also pleads that the assessee’s headquarter is in India. So, this exclusion clause does not apply. We notice that in case law Lufthansa Cargo India (P) Ltd vs DCIT [2004 (6) TMI 273 - ITAT DELHI-B], head office or place of control of business have been held to be immaterial factors for this exclusion principle u/s 9(1)(vii)(b) of the Act. The Revenue does not dispute applicability of this decision in its grounds. The Revenue further contention that in view of explanation inserted by the Finance Act, 2010 with retrospective effect from 1.6.1976, it is immaterial as to whether the services have been rendered outside India or the payee does not have a permanent establishment in India, in our view, cannot be any issue about the insertion of this explanation. However, the assessment year before us is 2003-04 and this explanation came only in the year 2010. In these circumstances only, we hold that once the assessee had made all these payments, finalized accounts well before insertion of the explanation, it is not supposed to take the clock back and deduct TDS. We disagree with the Revenue’s ground on this reasoning. So far as the case law quoted by the Revenue of ACIT vs Evolv Clothing Co. (P) Ltd (2013 (9) TMI 232 - ITAT CHENNAI) is concerned, there was no specific issue as to whether the retrospective explanation mandated TDS deduction or not. So, this decision stands distinguished - Decided against revenue.
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