2019 (7) TMI 1978 - AT - Income Tax

TDS u/s 195 - payments made to non-resident professionals - Payments being FTS/FIS - HELD THAT - As the payment in question were for FTS/FIS and this is not disputed by the assessee. This is also a finding given by CIT(A) in this para that assessee has not disputed that these services make available the technical knowledge to assessee in India. Now as per the additional evidence filed before us it is seen that these invoices are in respect of rendering of services to the assessee in respect of certain legal cases filed against the assessee in USA. If that is so then how it can be said that by rendering these services the concerned parties had made available technical knowledge to assessee in India. As per the invoices of M/s. Angeli Law Group LLC the invoice is for professional charges for the month of March to October 2012 April 2013 and May 2013 in addition to that there is commission payment. Thus additional evidence should be admitted and hence we are admitting the same and restore the entire matter back in both years to the file of ld. CIT(A) for fresh decision. Appeals filed by the assessee are allowed for statistical purposes.

Summary

Issues:
- Assessment Year 2013-14: Whether the appellant is required to deduct tax at source under section 195 of the Act on payments made to non-resident professionals and commission agents.
- Assessment Year 2014-15: Whether the appellant is required to deduct tax at source under section 195 of the Act on payments made to non-resident professionals and the correct deduction under section 35(2AB) of the Act.

Assessment Year 2013-14:
The appeal for this year raised concerns regarding the deduction of tax at source under section 195 of the Act on payments made to non-resident professionals and commission agents. The Commissioner of Income Tax (Appeals) noted that the nature of these payments was for FTS/FIS, which was not disputed by the appellant. The Commissioner also acknowledged that these services provided technical knowledge to the appellant in India. However, the appellant submitted additional evidence, including invoices from legal firms for legal services provided outside India. The Tribunal admitted this evidence and remanded the matter back to the Commissioner for a fresh decision. The Tribunal emphasized that the additional evidence showed the invoices were related to legal services in the USA, not technical knowledge in India, warranting a reevaluation by the Commissioner. The Tribunal allowed the appeal for statistical purposes without delving into the merits of the case.

Assessment Year 2014-15:
In this year's appeal, the issue of deducting tax at source under section 195 of the Act on payments to non-resident professionals was again raised. Additionally, the correct deduction under section 35(2AB) of the Act was disputed. The Commissioner had limited the deduction under section 35(2AB) to the amount mentioned in Form 3CL, which the appellant contested, seeking a higher deduction. The Tribunal did not delve into the merits of the case for this year but admitted the additional evidence submitted for Assessment Year 2013-14, which highlighted the nature of the payments for legal services outside India. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for a fresh decision by the Commissioner based on the additional evidence provided.

In both cases, the Tribunal focused on the need for a reevaluation based on the additional evidence submitted by the appellant regarding the nature of the payments made to non-resident professionals and the correct application of tax deductions under the relevant sections of the Act. The Tribunal emphasized the importance of considering all relevant factors before making a decision and remanded the matters back to the Commissioner for fresh decisions.