2011 (5) TMI 506 - AT - Income Tax

Deduction of tax at source - The case of the assessee is that the payment was made for outright purchase of drawing and design and not for any technical services and therefore, no tax was required to be deducted - The assessee made an application to the Chartered Accountant (CA) M/s. B.K. Khare & Co. for issuing no objection certificate in the matter of deduction of tax at source - M/s. B.K. Khare & Co. however in the certificate opined that the issue was debatable - The assessee was not satisfied with the opinion given by the CA and filed appeal before the CIT(A) - Since, the assessee filed an appeal directly against the certificate issued by the CA without even approaching the Assessing Officer for passing a formal order - Therefore, respectfully following the decision of the Tribunal in assessee s own case in ITA No. 2733 to 39/M/03 dismiss the appeal of the assessee as not maintainable - Hence, the appeal of the assessee stands dismissed.

Summary

Issues:
Applicability of provisions of section 195 regarding deduction of tax at source from payment made to M/s. Tong Yong Mooslan Co. Ltd.

Analysis:
The appeal was against the CIT(A)'s order concerning the deduction of tax at source under section 195 for payments to M/s. Tong Yong Mooslan Co. Ltd. The agreement between the assessee and TYM involved the development of new tractor designs, with TYM providing engineering support. The assessee contended that the payment made was for the outright purchase of design, not technical services, hence no tax deduction was necessary. The CA's opinion was deemed debatable, leading to the appeal before the CIT(A), who referred to a previous decision against the assessee in a similar case. The Tribunal noted that the issue had been previously considered in the assessee's case and dismissed the appeal as not maintainable since it was filed directly against the CA's certificate without obtaining a formal order from the Assessing Officer as required under section 195(2). The Tribunal distinguished a prior case where an appeal was allowed without a formal order due to the Assessing Officer's clear stance on tax deduction, which was not the situation in the present case. Consequently, the appeal was dismissed as not maintainable, following the precedent set in the assessee's earlier case.

In conclusion, the Tribunal upheld the dismissal of the appeal, emphasizing the importance of obtaining a formal order from the Assessing Officer before challenging tax deduction requirements under section 195. The decision highlighted the necessity of following proper procedures and obtaining relevant orders before appealing against tax-related matters to ensure the maintainability of such appeals.