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2024 (11) TMI 315 - AT - Income TaxTDS u/s 195 - addition of expenditure for IT service charges u/s 40(a)(ia) - treating such expense incurred by the assessee company as fees for technical services/royalty - HELD THAT - We find that in the case of assessee itself for assessment years 2012-13, identical additions were made but the Co-ordinate Bench of this Tribunal has already decided the issue in favour of the assessee 2020 (1) TMI 1641 - ITAT PUNE held payment for use of software made by the assessee to CMA CGM, France does not satisfy the requirement of use of, or the right to use, any copyright of software . Once it is held that para 3 of Article 12 is not attracted, as a sequitur, the application of clause (a) of para 4 of Article 12 of the DTAA with Portuguese would automatically be ousted, thereby making the amount paid by the assessee to CMA CGM, France for use of LARA, DIVA and Ocean software as immune from taxation in India. Going by the beneficial provision in the DTAA vis- -vis the Act, it is held that there was no requirement on the part of the assessee to deduct tax at source which should have called for any disallowance u/s. 40(a)(i) of the Act - Decided against revenue.
Issues:
Appeal against deletion of addition of expenditure for IT service charges under section 40(a)(ia) of the IT Act, 1961. Detailed Analysis: 1. The Revenue challenged the order of the LD. Commissioner of Income Tax (Appeals) directing the deletion of an addition of Rs. 9,06,53,035/- made by the Assessing Officer on account of expenditure for IT service charges under section 40(a)(ia) of the IT Act. The Assessing Officer disallowed the expenses as TDS was not deducted on the payments made by the assessee. The LD. Commissioner allowed the appeal of the assessee, relying on a previous order passed by the ITAT, Pune Benches, in the assessee's own case for a previous assessment year. 2. The Revenue contended that the payment of Rs. 9,06,53,035/- should be treated as fees for technical services, subject to TDS. The assessee argued that the issue was already decided in their favor by the Co-ordinate Bench of the Tribunal in previous assessment years. The Tribunal noted that in previous cases, similar additions were made but were deleted by the Tribunal, as the payments did not fall under the definition of fees for technical services or royalty. The Tribunal referred to specific clauses of the DTAA with Portuguese and held that the payments made by the assessee did not attract taxation in India, thus no TDS was required. 3. The Tribunal emphasized that the issue had been consistently decided in favor of the assessee by the Co-ordinate Bench in previous assessment years. The Tribunal found no change in the facts or circumstances of the present case warranting a different decision. Therefore, the Tribunal upheld the order of the LD. Commissioner deleting the disallowance of Rs. 9,06,53,035/- under section 40(a)(ia) of the IT Act. The appeal filed by the Revenue was dismissed, and the order was pronounced on November 5th, 2024.
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