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2023 (5) TMI 586 - SCH - Income TaxTDS u/s 195 - Deduction of tax at source - assessee, a company incorporated in India, was a wholly owned subsidiary of a company incorporated in the Netherlands - HELD THAT - In view of the fact that it has been specifically found that the assessee in the present case (company in India) is held to be not liable to deduct the tax at source, no interference of this Court is called for against the impugned judgment and order passed by the High Court. However, the question of law, if any, on interpretation of Section 195 is kept open. High Court has observed that as the assessment proceedings in the case of foreign company are reopened and therefore if the final view taken is that the VOAMC is assessable to tax, the assessees herein would also be treated as assessee in default, which would attract the consequences provided under Section 40(a)(i) - Once the assessees herein are held to be not liable to deduct the tax at source at all merely because subsequently the foreign company VOAMC is held liable to be taxed in India, the assessees herein cannot be treated as assessees in default. Even the aforesaid is on surmises and conjectures. Whatever the consequences on the pending proceedings against or initiated by VOAMC pending in the Madras High Court, the necessary consequences shall follow. However, at present the observations made in paragraph 25 of the impugned judgment and order that in case the assessment proceedings in VOAMC which are reopened are held to be against the VOAMC and VOAMC is liable to be taxed in India, the assessees herein would also be treated as assessees in default, the same is hereby quashed and set aside with the above observations. The present appeals preferred by the assessees are hereby allowed to the aforesaid extent. TDS u/s 195 - Deduction of tax at source - HC 2010 (8) TMI 1172 - DELHI HIGH COURT confirmed order of 2010 (3) TMI 167 - DELHI HIGH COURT stating assessee was not liable to deduct tax at source u/s 195(1) in respect of the mobilization and demobilization costs reimbursed by the appellant to VOAMC - HELD THAT - SLP disposed of.
Issues involved:
The issues involved in the judgment are related to the liability to deduct tax at source under Section 195 of the Income Tax Act, consequences for assessees if a foreign company is held liable to be taxed in India, and the observations made in the impugned judgment regarding the assessees being treated as assessees in default. Summary: Issue 1: Liability to deduct tax at source under Section 195 The Supreme Court upheld the impugned judgment stating that the company in India is not liable to deduct tax at source. The Court mentioned that no interference is required against the High Court's decision. However, the Court kept the question of law on the interpretation of Section 195 open for future consideration. Issue 2: Consequences for assessees if a foreign company is held liable to be taxed in India Regarding the appeals preferred by the assessees, the Court addressed the concerns raised by the assessees regarding being treated as assessees in default if the foreign company is held liable to be taxed in India. The Court observed that the assessees cannot be treated as defaulters solely based on the liability of the foreign company. The Court quashed the observations made by the High Court in this regard and allowed the appeals of the assessees to that extent. Separate Judgment: A separate judgment was delivered in SLP(C) No.10479/2012, which was disposed of in view of the decision in CA No.5089 of 2011. The pending applications were also disposed of accordingly.
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