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TMI Blog2022 (4) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS u/s 195 - Non-deduction of TDS qua payments of marketing expenses - HELD THAT:- Commissioner while considering the aforesaid claim of the Assessee and analyzing the provisions of section 9 195 of the Act, held that the DTAA between India and Ireland provides that the profits of the foreign enterprise shall be taxable only if it had carried on business in India through a permanent establishment ( PE ) situated therein. The Ld. Commissioner also observed that FII has certified that it has no permanent establishment ( PE ) in India and is a resident of Ireland for taxation purposes. Commissioner finally concluded that there was no liability of tax on payments made for advertising services to FII. Before us the aforesaid facts remaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner who vide impugned order confirmed the same by concluding as under: 5. The above written submission has been carefully considered. Grounds of appeal nos. 3 and 4 are general in nature. At ground of appeal no. 1, the appellant has disputed the addition of trade creditors amounting to ₹ 1,64,02,845/-. The appellant has submitted that the total amount of ₹ 1,64,02,845/- included trade creditors of only ₹ 98,16,753/-, and the remainder amount consisted of provisions for ascertained liabilities, expenses payable, and reimbursement to be made to employees. The appellant filed confirmations of balances obtained from the creditors on 20.03.2015, but the AO had completed the assessment on 19.03.2015. The appellant has submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made of ₹ 1,64,02,845/- which includes provisions for expenses and ascertained liabilities in addition to trade creditors, cannot be sustained. Accordingly, the appellant succeeds at ground of appeal no. 1. 6. At ground of appeal no. 2, the appellant has contested the disallowance u/s 40(a)(ia) of marketing expenses, on account of failure to deduct tax on payments made to Facebook Ireland Inc. (hereafter referred to as Fll). The appellant has submitted that it had explained before the AO that Fll had no permanent establishment in India and payments made to it for advertising services were therefore not chargeable to tax in India. Reliance was placed on Article 7 of the DTAA between India and Ireland, and Declaration of No Perman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax in India under the provisions of the Income Tax Act. The DTAA between India and Ireland provides that the profits of the foreign enterprise shall be taxable only if it had carried on business in India through a permanent establishment situated therein. Fll has certified that it has no permanent establishment in India, and is a resident of Ireland for taxation purposes. The AO has brought nothing on record to refute these contentions. Hence there was no liability to deduct tax on payments made for advertising services to FII. Accordingly, no disallowance u/s 40(a)(ia) was called for, and the appellant succeeds at this ground of appeal. 4. Being aggrievedby the Impugned Order, has the Revenue Department preferred the instant appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and liable to be set aside on this ground alone. 7.1 We observe from the orders passed by the authorities below that total amount of ₹ 1,64,02,845/- on the basis of which addition was made u/s 68 of the Act by the AO includes the only amount of ₹ 98,16,753/- qua trade creditors and remaining amount consisted of provision for ascertained liabilities, expenses payable and reimbursement to be made to the employees. The Assessee in support of its contention also filed confirmation of the balances obtained from the creditors on 20.03.2015. However, it is a fact that AO had completed the assessment on 19.03.2015 itself. It was also claimed by the Assessee that the Assessee had furnished the purchase registers, ledger acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I ), which admittedly did not have any permanent establishment ( PE ) in India and, therefore, the payments made to it for advertisement services were not chargeable to tax in India in view of the Article 7 of DTAA between India and Ireland. In support of its contention the Assessee also relied upon various judgments including in the case of Yahoo India Pvt. Ltd. Vs. DCIT (2011) 11 Taxmann.com 431 , as relied upon by the Ld. AR before us as well, wherein it is clearly held that in the absence of any permanent establishment ( PE ) of the deductor, the deductee is not liable to deduct the tax at source from the payments made for online advertisement services . It was also claimed by the Assessee that equalization levy was introduced to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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