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TMI Blog2008 (11) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... harges to M/s. Bridge Container SVC Company LLC of UAE ("BCC" for short) to the tune of Rs. 47,87,321. The Assessing Officer observed that these two payments were made to the non-resident companies without deducting tax at source, whereas there ought to have been deduction of tax at source. On being show caused as to why the disallowance be not made under section 40( a )( i ) for non-deduction of tax at source on these payments, the assessee stated that the payment to BCC was made towards containers storage charges which services were rendered outside India. Insofar as the second payment to CSC was concerned the assessee put forth that these were recovery charges of its containers outside India for rendering of services abroad. It was also submitted on behalf of the assessee that section 40( a )( i ) contemplated the payment of interest, royalty or fees for technical services as defined in Explanation to this clause as such the nature of payments made by it were outside the ambit of this section. The Assessing Officer did not concur with the submissions advanced on behalf of the assessee on the ground that section 40( a )( i ) also refers to or any other sum chargeable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced before him for the first time. It has been specifically provided in sub-rule (3) of rule 46A. The purpose behind this provision is that the assessee should not be allowed to bypass the assessment proceedings and come out with fresh evidence in the appellate proceedings in support of the claim. As the logic behind this provision is to allow an opportunity to the Assessing Officer to examine the material/evidence sought to be placed before the ld. CIT(A) for the first time before granting any relief, there cannot be any grievance to the revenue if such additional evidence is excluded from examination by the Tribunal and the finding given by the ld. first appellate authority, based on such additional evidence, is also vacated. In such a situation the issue would require decision de hors such evidence and the finding of the ld. first appellate authority on such evidence. In view of the fact that the ld. AR has fairly agreed for ignoring such additional evidence and the finding of the ld. CIT(A) on such evidence, we take up the issue for decision on the basis of the order of the Assessing Officer and the material placed before him. 5. The first payment in dispute is of Rs. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness or profession" if any interest, royalty, fees for technical services or other sum chargeable under this Act which is payable outside India or is paid in India without deducting tax at source or after deducting there is failure to deposit the same during the stipulated period. 7. The view point of the assessee that section 40( a )( i ) is not attracted in the present case because the payment is neither interest nor royalty nor fees for technical services is sans merits. This clause does not stop at mentioning the above three items and goes on to include "or any other sum chargeable under this Act". Hence it is abundantly clear that any payment made to the non-resident comes within the sweep of this provision provided it is chargeable to tax under this Act in the hands of the non- resident. There is no warrant for restricting the scope of section only to the interest or royalty or fees for technical services. To put it simply if any amount payable to non-resident is liable to tax in his hands, then it is necessary for the assessee to make deduction of tax at source from such payment made in order to come out of the rigour of section 40( a )( i ). A duty has been cast up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table to the operations carried out in India then the entire sum is deemed to accrue or arise in India as per clause ( i ) of section 9(1). If however a part of such income is relatable to the operations carried out in India then only that part of income which is so attributable to the operations carried out in India shall be deemed to accrue or arise in India. Still in another situation if no part of the income is attributable to the operations carried out in India, then the entire amount would go out of the ambit of section 9(1). So what is material for fixing liability under section 9(1) is that the non-resident should have carried out operations in India in order to categorize that part of the income as having been deemed to accrue or arise in India. 10. Adverting to the facts of the instant case we observe that CSC rendered services entirely outside India when it got released the ships of assessee from Kuwait and Dubai. No activity worth the name was done by CSC in the territory of India. The Assessing Officer could not appreciate the legal position in right perspective when he held on page 5 of his order that: Therefore, it is clear that the assessee-company is having bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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