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2017 (11) TMI 174 - HC - Income TaxWithhold tax u/s 195 - payments made by it to Steria France for management services fee - ITAT deleting the disallowance made by Ld. AO under Section 40(a)(i)- Held that - Issue stands answered against the Revenue by the decision of this Court in Steria (India) Limited v. Commissioner of Income Tax-VI (2016 (8) TMI 166 - DELHI HIGH COURT). The Court accordingly declines to frame the question. Particular item is not part of Export Turnover when it cannot constitute a part of Total Turnover as well - whether ITAT was correct in law in holding that if a particular item is not part of Export Turnover when it cannot constitute a part of Total Turnover as well? - Held that - Having perused the said judgment The Commissioner of Income Tax-8 v. M/s. Gem Plus Jewellery India Ltd. (2010 (6) TMI 65 - BOMBAY HIGH COURT) the Court is not persuaded to take a view different from that taken by the ITAT or the Bombay High Court that the total turnover always includes the export turnover and that if a particular item is not part of the export turnover, it cannot constitute a part of the total turnover either
Issues:
1. Whether the Assessee was liable to withhold tax under section 195 of the Act on payments made for management services fee and the disallowance under Section 40(a)(i) of the Act. 2. Whether a particular item not part of 'Export Turnover' can constitute a part of 'Total Turnover'. Analysis: 1. The first issue raised by the Revenue was regarding the liability of the Assessee to withhold tax under section 195 of the Act on payments made for management services fee and the subsequent disallowance under Section 40(a)(i) of the Act. The High Court referred to a previous decision in Steria (India) Limited v. Commissioner of Income Tax-VI (2016) 386 ITR 390 (Del) where a similar question was addressed. The Court, based on the precedent, declined to frame the question, indicating that the matter had already been settled in a previous judgment. 2. The second issue involved whether a specific item not forming part of the 'Export Turnover' could still be considered a part of the 'Total Turnover'. The ITAT had based its decision on the Assessee's previous case for the AY 2009-10 and also cited a judgment from the Bombay High Court in The Commissioner of Income Tax-8 v. M/s. Gem Plus Jewellery India Ltd. (2011) 330 ITR 175 (Bom). After reviewing the judgments, the High Court found no reason to deviate from the stance taken by the ITAT and the Bombay High Court. The Court concurred with the view that the total turnover inherently includes the export turnover, and if an item is not part of the export turnover, it cannot be considered a part of the total turnover either. In conclusion, the High Court dismissed the appeal, upholding the decisions made by the ITAT and the Bombay High Court in the respective matters.
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