Foreign Principal Services Not "Fees for Technical Services"; TDS Obligations u/s 195 Not Applicable.

The High Court examined whether the nature of functions performed by foreign principals in favor of the assessee would constitute "fees for technical services" u/s 9(1)(vii), thereby requiring tax deduction at source (TDS) u/s 195 and leading to disallowance u/s 40(a)(i) for non-deduction. The Court held that the obligation to deduct TDS u/s 195 arises only if the reimbursement of remittances falls within the scope of Section 9, which introduces legal fictions for income accrued in India. The Court found that the appellants failed to establish that the remitted amounts fell within the ambit of technical, managerial, or consultative services rendered. Consequently, no substantial question of law arose, and the addition u/s 40(a)(i) was not sustainable. .....

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