2019 (2) TMI 524 - AT - Income Tax

TDS 195 - Disallowance u/s 40(a)(ia) - tds liability in respect of activities abroad - non-deduction of TDS on payments made to foreign agents - Held that - Issue raised by revenue in its appeal stands squarely covered by decision of this Tribunal in assessee s own case for assessment year 2010-11 This Court in CIT vs. Eon Technology (P) Ltd. 2011 (11) TMI 20 - DELHI HIGH COURT where the Court in similar circumstances held that providing such services, in respect of activities abroad, do not constitute fee for technical services and therefore, disallowable u/s 40(a). No substantial question of law arises.

Summary

Issues involved:
1. Disallowance of payment under section 40(a)(i) of the Income Tax Act, 1961.
2. Non-adjudication of TDS credit and interest under sections 234B and 234C.

Analysis:
1. Disallowance under section 40(a)(i):
The case involved cross-appeals by the revenue and the assessee against the order passed by the Ld.CIT(A). The revenue contested the deletion of an addition made by the Assessing Officer under section 40(a)(i) of the Income Tax Act. The Ld.CIT(A) had ruled in favor of the assessee, leading to the revenue's appeal. The Tribunal noted that the issue was already settled in favor of the assessee in a previous case for the assessment year 2010-11. The decision in the earlier case was upheld by the Hon’ble Delhi High Court, which observed that the services provided abroad did not constitute a fee for technical services and hence were not disallowable under section 40(a). Consequently, the Tribunal upheld the view taken by the Ld.CIT(A) and dismissed the revenue's appeal.

2. Non-adjudication of TDS credit and interest under sections 234B and 234C:
The assessee, in its cross-objection, raised concerns regarding the non-adjudication of TDS credit and interest under sections 234B and 234C. The Tribunal directed the Ld. AO to pass an order on the application filed by the assessee under section 154 of the Income Tax Act, granting the TDS credit as per the law. The Tribunal found ground 1 to be general in nature and did not require adjudication. Grounds 3 and 4 were considered consequential and did not require separate adjudication. The cross-objection filed by the assessee was allowed for statistical purposes.

In conclusion, the Tribunal upheld the decision of the Ld.CIT(A) in deleting the addition under section 40(a)(i) in favor of the assessee. Additionally, the Tribunal directed the Ld. AO to grant TDS credit to the assessee as per the law. The revenue's appeal was dismissed, and the assessee's cross-objection was allowed for statistical purposes.