2019 (11) TMI 1515 - AT - Income Tax

TDS u/s 195 - tds liability - HELD THAT - When the Assessing Officer himself issued certificates saying that the assessee is not required to deduct tax under Section 195 of the Act this Tribunal is of the considered opinion that there is no justification for making any disallowance during the years under consideration. The copies of certificates are filed by the assessee. This Tribunal is unable to uphold the orders of both the authorities below. Accordingly orders of both the authorities below are set aside and the disallowance made by the Assessing Officer is deleted. - Decided in favour of assessee.

Summary

Issues:
Appeals against common order passed by CIT(A) for assessment years 2012-13, 2013-14, and 2014-15 regarding disallowance of administrative expenses paid to parent company in Singapore under Section 195 of the Income-tax Act.

Analysis:
The appellant, engaged in art designing, appealed against disallowance of administrative expenses paid to its parent company in Singapore for various assessment years. The appellant argued that tax deduction under Section 195 of the Income-tax Act was not required as per the Double Taxation Avoidance Agreement with Singapore unless technology was provided. The appellant cited judgments from Karnataka High Court and Mumbai Tribunal supporting their stance. The appellant also presented certificates from Assessing Officer for non-deduction of tax in subsequent years. The Departmental Representative relied on the Assessing Officer and CIT(A) observations.

The Tribunal reviewed submissions and records, noting that the technology was not transferred to the appellant by the parent company in Singapore. Decisions and management were made in Singapore without providing technology to the appellant. The Tribunal held that without technology transfer, tax deduction was not necessary as per the India-Singapore Double Taxation Avoidance Agreement. Previous decisions by the Mumbai Tribunal and the Tribunal itself supported this view. The Tribunal also considered the certificates from the Assessing Officer, which stated no tax deduction was required under Section 195.

Based on the above analysis, the Tribunal concluded that the disallowance made by the Assessing Officer was unjustified. Therefore, the Tribunal set aside the orders of the lower authorities and allowed all three appeals filed by the assessee. The judgment was pronounced in Chennai on 29th November 2019.