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TMI Blog2016 (3) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income-tax (Appeals) erred in upholding the disallowance of Rs. 33,93,493/- under section 40(a)(i) of the Income-tax Act, 1961 ('Act'), for payment made by the Appellant to its overseas group entity for participating in various training programs undertaken outside India, on account of failure on the part of the Appellant to withhold tax thereon under section 195 of the Act. 2. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in not appreciating the fact that retrospective amendment to section 9(1) was inserted by Finance Act 2010 with effect from 1st June 1976 only after end of the financial year and was hit by the doctrine of 'impossibility of perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees for ICCA APAC 2010 5,07,000 Total 33,93,493 3. The AO, in response to the show cause notice as to why disallowance under section 40(a)(i) should not be made, to which the assessee submitted that, it was under a bona fide belief that payment made to Switzerland company for survives rendered outside India would not fall within the ambit of section 9(1)(vii). Since, here in this case the payment related to the services rendered by a non-resident company outside India, therefore, no TDS was required to be deducted by assessee. This view and belief was stated to be derived from the decision of Hon'ble Supreme Court in the case of Ishika Wajima-Heavy Industries Ltd vs DIT, reported in [2007] 288 ITR 408 wherein, it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant provision of the Act. It tries to remove the vaguenesscrept in the main enactment; therefore, the explanation here merely qualifies for provisions of section 9(1)(vii). After detailed discussions, he confirmed the said disallowance. 5. Before us, the Ld. Counsel submitted that, assessee had made the payment mainly in the year 2009. At the time of making the payment, there was a decision of Hon'ble Supreme Court in the case of Ishika Wajima-Heavy Industries Ltd (supra), which provided that, if the services has been rendered outside India and not utilized in India then, assessee was not liable to deduct TDS. The amendment brought in section 9(1)(vii) by insertion of an explanation with retrospective effect came into statute only after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which got the President's assent in May, 2010 has been brought in the statute with retrospective effect form 1st June, 1976 and such an Explanation is clarificatory in nature which now provides that, the income of a non-resident shall be deemed to accrue in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) of section 9 and shall be included to the total income of the non-resident, whether or not the non-resident has resident or place of business or business connection in India or a non-resident has rendered services in India. Though, such an amendment has been brought in the statute with retrospective effect but at the time of making the payment there was no such provision under the Act and in fact, the law of the la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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