2023 (7) TMI 17 - AT - Income Tax

TDS u/s 195 - disallowance of software support charges u/s. 40(a)(i) for non-deduction of tax - HELD THAT - We find that the issue is now stands covered in favour of the assessee by the decision of Hon ble High Court of Madras in assessee s own case for earlier assessment years 2021 (12) TMI 1447 - MADRAS HIGH COURT wherein following the decision of M/s. Engineering Analysis Centre of Excellence Pvt Ltd 2021 (3) TMI 138 - SUPREME COURT upheld the order of the Tribunal in allowing relief to the assessee towards payment made to non-residents for software support charges without deduction of tax at source u/s. 195. No error in the reasons given by the CIT(A) to delete additions made by the AO towards disallowance of software support charges u/s. 40(a)(i) for non-deduction of tax at source u/s. 195 - Decided in favour of assessee.

Summary

Issues:
The judgment involves the appeal against the order passed by the Commissioner of Income Tax (Appeals) pertaining to the assessment year 2016-17.

Grounds of Appeal:
The revenue raised multiple grounds of appeal including the deletion of disallowance of deduction u/s 40(a)(i) of the Act, consideration of decisions by ITAT and Jurisdiction High Court, and the nature of payments towards software.

Facts of the Case:
The assessee, M/s. Saipem India Private Ltd, filed its return of income for the assessment year 2016-17, declaring a total income. The assessment was completed, making additions towards disallowance of software support charges for non-deduction of TDS. The CIT(A) deleted the additions based on previous decisions and the matter is now before the Appellate Tribunal.

Arguments:
The CIT-DR argued that the additions made by the Assessing Officer should not have been deleted, citing previous decisions. The Counsel for the assessee supported the CIT(A)'s order, stating that the issue is now covered in favor of the assessee by relevant court decisions.

Decision and Analysis:
After hearing both parties and reviewing the orders, the Tribunal found that the issue is now covered in favor of the assessee by the decisions of the High Court and the Supreme Court. The Tribunal upheld the CIT(A)'s order to delete the additions made by the Assessing Officer, concluding that there was no error in the reasoning provided by the CIT(A).

Conclusion:
The Appellate Tribunal dismissed the appeal filed by the revenue, upholding the order of the CIT(A) to delete the additions made by the Assessing Officer. The decision was pronounced in the court on 28th June, 2023 at Chennai.