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TMI Blog2017 (9) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) TMI 1 - PUNJAB AND HARYANA High Court ). CIT-A correctly held that TDS borne by the resident Indian payer is to be deemed as the income of the recipient and it is only out of such income of the recipient, the Indian payer is deemed to withhold the TDS at the appropriate rate and pay to the Govt. it was further observed by the Tribunal that what the Indian payer deposits to the Govt. cannot be construed as tax of the non-resident being borne by the Indian resident payer, but the amount paid is only out of the deemed income of the recipient and the same would not fall within the definition of tax on income for disallowance u/s 40(a)(ii) of the Act. - Decided against revenue - ITA No. 5580/Mum/2015, ITA No. 5581/Mum/2015 - - - Dated:- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to ₹ 20,61,771/- by holding that the provisions of section 40(a)(ii) would apply only in a situation where the appellant has paid taxes on his own income and not in respect to income of others on which the appellant has paid taxes as per condition of agreements 3. We have heard rival contentions and gone through the facts and circumstances of the case. We find that the AO disallowed the amount of TDS of ₹ 20,61,771/- by applying the provisions of section 40(a)(ii) of the Act. The CIT(A) following the decision of Mumbai ITAT in the case of Karan Johar Vs. DCIT (2011) 11 taxmann.com 268 (Mum) allowed the claim of the assessee, wherein it is held that the TDS borne by the resident Indian payer is to be deemed as the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign entity and not on income of the company. In support of its contention, the appellant has relied upon judgement of Hon ble Mumbai ITAT in case of Karan Johar Vs. Deputy Commissioner of Income Tax, (2011) 11 taxmann.com 268 (Mum) (supra), the relevant part of the judgement of Hon ble Tribunal Mumbai A Bench is reproduced as under; What was being paid by the Indian resident payer, be it 7' or the assessee when it was reimbursed was only the income of the non-resident payable as tax to the India Government. The same would not fall within the definition vi tax on income for disallowance under section 40(a) (ii). On this account also the amount reimbursed by the assessee to 'T' could not be disallowed under section 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is evident that the provisions of Section 40(a)(ii) would apply only in a situation where the appellant has paid taxes on his own income and not in respect to income of others on which the appellant has paid taxes as per conditions of the agreements. In view of the judgements of Hon'ble ITAT and High Courts, as discussed above and position of law as per provisions of Section 40(a)(ii), the disallowance of ₹ 20,61,771/- made by the A.O. u/s.40(a)(ii) is deleted. This ground of appeal of the appellant is allowed. 4. The learned Sr. DR could not find infirmity in the findings of the CIT(A) and only supported the order of the AO. 5. We find that this issue is squarely covered in favour of assessee by the decision of co-ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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