2014 (2) TMI 1266 - AT - Income Tax

TDS u/s 195 - whether notwithstanding taxability of amounts paid to non-residents section 40(a)(ia) read with section 195 of the Income Tax Act 1961 disallowance can not be invoked in case in which no services are rendered in India in view of pre amended section 9 (1)(vii) read with Explanation thereto? - This plea according to the assessee applicant was accepted by the learned CIT(A) but the Tribunal has not dealt with the same - Held that - In view of the above discussions as also bearing in mind the fact that the Tribunal indeed did not deal with the above aspect of the matter in the order dated 4th February 2014 and with the consent of parties we deem it fit and proper to recall the order for the limited purpose of adjudication on correctness of the above plea. Accordingly the hearing is now fixed on 04.03.2014 for the limited purpose of dealing with the said plea as prayed by the assessee.

Summary

Issues:
1. Whether the Tribunal failed to address the alternative plea of the assessee regarding the taxability of amounts paid to non-residents under section 40(a)(ia) read with section 195 of the Income Tax Act, 1961.

Analysis:
The Appellate Tribunal, in response to a Miscellaneous Application filed by the assessee, acknowledged that the Tribunal's previous order did not address the alternative plea raised by the assessee. The plea in question pertained to the taxability of amounts paid to non-residents and whether the provisions of section 40(a)(ia) along with section 195 of the Income Tax Act, 1961, could be invoked in cases where no services were rendered in India. The assessee contended that this aspect was accepted by the learned CIT(A) but was not dealt with by the Tribunal in its order dated 4th February, 2014.

The Departmental Representative did not contest the assessee's assertion and agreed that the Tribunal had not adjudicated on this specific aspect of the matter. Consequently, with the consent of both parties, the Tribunal decided to recall the order for the limited purpose of examining the correctness of the plea raised by the assessee. A hearing was scheduled for 04.03.2014 to address and deliberate on the aforementioned plea, as requested by the assessee.

In conclusion, the Tribunal allowed the Miscellaneous Application filed by the assessee, granting permission to revisit the order solely to consider and rule on the validity of the plea regarding the taxability of payments to non-residents under the relevant sections of the Income Tax Act, 1961. The order was pronounced in open court on 28th February, 2014.