9911796707
TMI Blog2011 (12) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal are as follows:- The assessee is an exporter of software. It filed its return of income on 22.12.1999 admitting a total income of Rs. 8,45,80,130/-. The return was processed under Section 143(1) on 27.11.2002 accepting the income returned. Thereafter, on scrutiny, a notice was issued under Section 143(2) on various occasions. In response to the notice, the representative of the respondent appeared and it was proposed that a sum of Rs. 1,62,74,62,818/- had been excluded in the expenditure in foreign currency from export turnover when rendering technical services outside India while computing deduction under Section 80HHE of the Income-Tax Act, 1961 (hereinafter referred to as the 'Act'). Having regard to the contention of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngalore. 4. The ITAT by the impugned order dated 9.9.2005 held that the reasoning given by the first appellate authority for not making deduction under Section 195(1) of the Act without obtaining an exemption certificate under Section 195(2) of the Act or a declaration obtained that no income is chargeable to tax in India, the deduction is ought to have been made, is erroneous. The Tribunal further held that payments were made to overseas consultants for the professional services rendered by them and these payments were made from the permanent establishment outside India and such payments were made out of sources of income generated outside India. Hence, the same income could not be deemed to accrue in India and therefore, not chargeable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.11.2011 has been answered against the assessee and in favour of the revenue. Accordingly, following the reasons assigned in ITA.No.3232/2005 dated 4.11.2011 the first substantial question of law is answered in favour of the revenue and against the assessee. 7. The learned Counsel appearing for the appellant submitted that when admittedly payments have been made to the non-resident company, there was an obligation to deduct tax at source under Section 195(1) of the Act unless the assessee is able to show that the said payment was not subject to tax in India. The learned Counsel has taken us through the reasons assigned by the first appellate authority and the tribunal and submitted that those reasons are erroneous and in view of the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax [2010] 327 ITR 456/193 Taxman 234. 9. We have given careful consideration to the contentions of the learned Counsel appearing for the parties and scrutinised the material on record. 10. The material on record would clearly show that the question about non-deduction under Section 195 of the Act in respect of the payments made in a sum of Rs. 17,35,363/-to Powersolve Corporation USA was raised by the first appellate authority and a show cause notice was also issued to the assessee. The same has been explained by the assessee saying that the said payment do not attract payment of tax in India and wherefore, there was no liability to tax in India on the said payment and question of deduction would not arise. The reasoni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w section 195(2) of the Income-tax Act)............... The application of section 195(2) pre-supposes that the person responsible for making the payment to the non-resident is in no doubt that tax is payable in respect of some part of the amount to be remitted to a non-resident but is not sure as to what should be the portion so taxable or is not sure as to the amount of tax to be deducted. In such a situation, he is required to make an application to the Income-tax Officer (TDS) for determining the amount. It is only when these conditions are satisfied and an application is made to the Income-tax Officer (TDS) that the question of making an order under section 195(2) will arise." The Supreme Court further held as under; "Therefore, this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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