2018 (5) TMI 1800 - AT - Income Tax

TDS u/s 195 - non deduction of TDS on payment for training fees, survey fees and royalty - scope of amendment of act - Held that - As decided in assessee s own case for the A.Y. 2008-09 none of the payments in question are covered by the provisions of section 9, that the non-residents had no PE in India, that the assessee was not liable to deduct tax at source for these payments. We are of the opinion that his order does not suffer from any legal infirmity. Filing of its return the assessee is not required to deducted tax as per the existing provisions and later on because of the retrospective amendment or judgment of a court liability to deduct Tax at Source arises, the assessee cannot be held responsible for not deducting of tax at the time of filing of return. Considering the above discussion, we confirm the order of the FAA and decide the effective ground of appeal against revenue.

Summary

Issues:
Appeal against order of Commissioner of Income-Tax (Appeals)-32 for Assessment Year 2012-13 - Deletion of addition of Training fee Expenses, Survey fee, and Royalty due to non-deduction of TDS - Similarity with Assessment Year 2008-09 - Interpretation of Section 195 of the IT Act - Effect of retrospective amendment in Finance Act, 2010.

Analysis:
The appeal by Revenue challenged the deletion of additions made for non-deduction of TDS on training fee expenses, survey fees, and royalty for Assessment Year 2012-13. The appellant contended that the ld. CIT(A) erred in deleting the additions, citing a decision of Hon'ble ITAT, Mumbai regarding the emphasis of chargeability over the source of payment under Section 195 of the IT Act. Additionally, the appellant argued against the similarity drawn with Assessment Year 2008-09 due to the retrospective effect of the Finance Act, 2010.

The authorized representative of the assessee highlighted that the grounds of appeal raised by the Revenue were already decided in favor of the assessee for Assessment Year 2008-09 and 2010-11. The Tribunal had previously ruled in favor of the assessee in similar cases, which was acknowledged by the Revenue representative during the hearing. Subsequently, the Tribunal considered the submissions and reviewed the orders of the authorities below, noting the precedent set in the Tribunal's earlier decisions.

The Tribunal referred to previous orders related to Assessment Year 2008-09 and 2010-11, where the issue of non-deduction of TDS on training fees and royalty was addressed. In both instances, the Tribunal had ruled in favor of the assessee, emphasizing that the payments in question were not covered by the relevant provisions for TDS deduction. The Tribunal also considered the retrospective amendment to the law and the principle that an assessee cannot be held responsible for non-compliance due to subsequent changes in regulations.

After thorough consideration and in line with the precedent set by the Tribunal in the assessee's own case, the Tribunal confirmed the order of the ld. CIT(A) deleting the disallowances. The Tribunal found no reason to interfere with the decision of the lower authorities, ultimately dismissing the appeal filed by the Revenue. The judgment was pronounced in open court on 14.05.2018, upholding the decision in favor of the assessee based on established legal principles and precedents.