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2021 (6) TMI 107 - HC - Income TaxTDS u/s 195 - reimbursement of expenses paid paid to M/s. Cerner Corporation, USA - disallowance under section 40(a)(ia) for non deducting TDS - HELD THAT - Admittedly, the first substantial question of law has been rendered academic. Therefore, it is not necessary for us to answer the same. However, it is directed that the finding of the Tribunal with regard to the first substantial question of law shall not be treated as a precedent and it shall be open for the parties to argue the same in an appropriate case even in subsequent years. Re-computation of section 10A - HELD THAT - Insofar as the second substantial question of law is concerned, the same has been answered by the Supreme Court in HCL TECHNOLOGIES 2018 (5) TMI 357 - SUPREME COURT . Accordingly, the same is answered against the revenue and in favour of the assessee.
Issues:
1. Whether tax is deductible at source under section 195 of the Income Tax Act on the reimbursement of expenses paid to a foreign corporation? 2. Whether the re-computation of section 10A made by the assessing authority can be set aside based on a decision pending before the Supreme Court? Analysis: 1. The appeal was filed by the revenue against the order of the Income Tax Appellate Tribunal regarding the Assessment Year 2008-09. The first substantial question of law was whether tax should be deducted at the source under section 195 of the Act on the reimbursement of expenses to a US corporation. The assessee cited precedents from the Karnataka High Court and the Bombay High Court, arguing in favor of the assessee. The revenue conceded that the question had been rendered academic. The Court held that the question was academic and directed that the Tribunal's finding on this issue should not be treated as a precedent for future cases. The Court did not provide an answer to this question, as it was deemed unnecessary. 2. The second substantial question of law was whether the re-computation of section 10A by the assessing authority could be set aside based on a decision pending before the Supreme Court. The assessee relied on a decision by the Supreme Court in a different case. The Court ruled in favor of the assessee, citing the Supreme Court's decision in HCL TECHNOLOGIES. Consequently, the appeal was disposed of, with the second substantial question of law answered against the revenue and in favor of the assessee.
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