9911796707
TMI Blog2018 (4) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be deductible at source and disallowance u/s 40(a)(i) is not sustainable in the eyes of law. Moreover, the ld. CIT (A) has meticulously relied upon the provisions contained u/s 90(2) of the Act and Article 7 (1) of the Double Taxation Avoidance Agreement (DTAA) entered into between India and Italy, France, Germany and UK vide which existence of Permanent Establishment (PE) in India is necessary for subjecting to tax business of any entity in India. Since M/s. Sari Oren of France is admittedly a non-resident having no PE in India, the provisions contained u/s 40(a)(ia) are not applicable in this case. - Decided in favour of assessee - ITA No.1522/Del./2014 - - - Dated:- 23-4-2018 - SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit and loss account without deducting tax at source (TDS). Assessing Officer by invoking the provisions contained under section 40(1)(i) of the Income-tax Act, 1961 (for short the Act ) made disallowance of ₹ 4,06,78,105/- and made addition thereof to the total income of the assessee. 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the addition of by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessees who were non-residents as the amounts so credited in their favour were not at their disposal or control. It is not possible to hold that the non-resident assessees in this case either received or can be deemed to have received the sums in question when their accounts with the statutory agent were credited, since a credit balance, without more, only represents a debt and a mere book entry in the debtor's own books does not constitute payment which will secure discharge from the debt. They cannot, therefore, be charged to tax on the basis of receipt of income actual or constructive in the taxable territories during the relevant accounting period.X X X In the instant case, the non-resident assessees did not carry on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een stated that in such cases, the Indian assessee is not liable to deduct TDS under Section 195 of the Act from the commission and other related charges payable to such a non-resident having rendered service outside India. 14. The term business connection has been interpreted by the Supreme Court to mean something more than mere business and is not equivalent to carrying on business, but a relationship between the business carried on by a non-resident, which yields profits and gains and some activities in India, which contributes directly or indirectly to the earning of those profits or gains. It predicates an element of continuity between the business of the non-resident and the activity in India [CIT Vs. R.D. Aggarwal and Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount which is not chargeable to tax under the provisions of Act, tax at source (TDS, for short) is not liable to be deducted. Decision of Supreme Court in Transmission Corporation of Andhra Pradesh vs. CIT, (1999) 239 ITR 587 (SC), operates and is applicable when the sum or payment is chargeable to tax under the provisions of the Act. In such cases, TDS has to be deducted on the gross amount of payment made and not merely on the taxable income included in the gross amount. The said decision would not apply in case payment is made but the said sum in entirety is not chargeable or exigible to tax under the provisions of the Act. The said distinction has been rightly understood by the first appellate authority and the ITAT and correctly ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
