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Issues Involved:
1. Appealability of the order under Section 195 of the Income Tax Act. 2. Liability to deduct tax at source on payments made to a non-resident company under the Double Taxation Avoidance Agreement (DTAA) between India and Germany. Issue-wise Detailed Analysis: 1. Appealability of the Order under Section 195 of the Income Tax Act: The Department challenged the CIT(A)'s decision to rectify an earlier order dismissing the assessee's appeal on the grounds that the order under Section 195 was not appealable. The CIT(A) had initially dismissed the appeals, stating that the order under Section 195 was not appealable. However, the assessee filed applications under Section 154, citing a mistake apparent from the record, as Section 248 of the IT Act provides for an appeal by a person denying liability to deduct tax. The CIT(A) reconsidered and recalled the earlier order, deciding that the order under Section 195 was indeed appealable. The Tribunal upheld the CIT(A)'s rectification, noting that the CIT(A) had correctly applied the Supreme Court's ruling in M.K. Venkaatachalam vs. Bombay Dyeing & Mfg. Co. Ltd., which allows for the rectification of glaring and obvious mistakes of law. The Tribunal found no infirmity in the CIT(A)'s decision, as the Departmental Representative failed to provide any material evidence to the contrary. 2. Liability to Deduct Tax at Source on Payments Made to a Non-Resident Company: The Department also contested the CIT(A)'s decision that no tax should be deducted at source on payments made to a non-resident company, Lurgi GmbH, under an agreement approved by the Government of India. The payments were for the services of foreign technicians deputed to India. The assessee argued that under Article XII of the DTAA between India and Germany, the payments were not taxable in India as all conditions set out in the DTAA were satisfied. The Tribunal reviewed the facts and found that the payments were indeed reimbursements for remuneration, benefits, and other expenses payable to the deputed foreign technicians. The CIT(A) had concluded that the payments were in the nature of salary income for the technicians and were not subject to Indian tax under the DTAA. The Tribunal noted that the conditions of Article XII(3) of the DTAA were satisfied, as the technicians were not present in India for more than 183 days, the services were rendered for a resident of Germany, the remuneration was subject to German tax, and the remuneration was not deductible in computing the profits of an enterprise chargeable to Indian tax. The Tribunal also referenced the Delhi High Court's decision in CIT vs. Bharat Heavy Electricals, which supported the CIT(A)'s findings. The Tribunal concluded that the CIT(A)'s decision was correct and upheld the order, dismissing the Department's appeals. Conclusion: The Tribunal dismissed all 13 appeals filed by the Department. The CIT(A)'s rectification of the order under Section 195 was upheld, and the decision that no tax should be deducted at source on payments made to the non-resident company under the DTAA was confirmed. The Tribunal relied on relevant case law and the provisions of the DTAA to reach its conclusions.
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