2011 (7) TMI 309 - AT - Income Tax

DTAA - TDS u/s 195 - import of software - CIT(A) held that the appeals, in question, are not maintainable for the reason that the assessee has never approached the Assessing Officer for certificate under section 195(2) for remittance of the amount without deduction of tax - whether, the law as amended with effect from 1-6-2007 to section 248 is applicable or not, has not been adjudicated by the learned CIT(A) and the facts have not been verified. If it is concluded that, on the facts and circumstances of the case, the law as existed prior to the amendment brought on the statute by the Finance Act, 2007, is applicable then - Appeal is allowed by of remand to CIT(A)

Summary

Issues:
Appeals against CIT(A) orders for non-deduction of tax on software import payments under section 195.

Analysis:
1. The appeals involved a common issue regarding the non-admittance of appeals under section 248 of the Income-tax Act, 1961 for payments made to a non-resident for software imports under section 195 after deducting tax. The CIT(A) held that the appeals were not maintainable as the assessee did not approach the Assessing Officer for a certificate under section 195(2) for remittance without tax deduction. The assessee contended that the tax was deducted at the source and remitted to the government before filing the appeals.

2. The assessee's counsel argued that the CIT(A) erred in applying a previous judgment without considering the current scenario where the tax was already deducted and remitted. Citing various case laws, the counsel contended that appeals can be filed directly under section 248. Additionally, the counsel referred to a Mumbai Tribunal decision that emphasized the right to appeal without an order from the Assessing Officer in cases of tax deduction disputes.

3. The Departmental Representative opposed the assessee's arguments, highlighting the post-amendment conditions of section 248 effective from 1-6-2007. The DR argued that the appeals should be dismissed as the assessee did not meet the conditions prescribed in the amended section. The DR also pointed out that the Chartered Accountant's certificate suggested tax deduction under the Double Taxation Avoidance Agreement (DTAA) between India and UAE.

4. After considering the submissions, the Tribunal concluded that the CIT(A) failed to determine the applicability of the pre-amendment law to section 248 or the post-amendment provisions. The Tribunal noted that if the pre-amendment law applied, the CIT(A) should have admitted the appeals for further examination. Alternatively, if the post-amendment law applied, the CIT(A) needed to assess whether the tax was to be borne by the payer. Therefore, the Tribunal remitted the issue back to the CIT(A) for a fresh adjudication based on the law and providing a reasonable opportunity for the assessee to present their case.

5. Consequently, all the appeals filed by the assessee were treated as allowed for statistical purposes, indicating the decision to remit the issue back to the CIT(A) for a thorough review and decision based on the applicable legal provisions.