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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI
These two appeals by the Revenue are arising out of the different orders of Commissioner of Income Tax (Appeals)-3 & XI, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-3/ACIT-11(2)/IT-205/03-04/SA/IT- 391/11-12, CIT(A)-XI/ACIT 11(2)/IT-222/04-05 dated 28-03-2013 & 30-03- 2005. The Assessments were framed by the Assistant Commissioner of Income Tax, Circle 11(2), Mumbai (in short ACIT) for the assessment year 1999-2000, 2001-02 vide order dated 28-03-2002 & 30-03-2004 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’). & 4503/Mum/2013 (A.Y.99-00, 01-2) 2. The first common issue in these two appeals of Revenue is regards to the order of CIT(A) holding that KPMG is a mutual association and its receipts would not constitute income chargeable to tax. For this Revenue has raised identical worded grounds in both the years and hence, for the sake of convenience, we are reproducing the grounds from the AY 1999- 2000 and the grounds raised by Revenue vide ground No. 1 to 4 reads as under: -
1. On the facts and in the circumstances of the case and in 1afl whether the Ld. CIT(A) erred in holding that the KPMG is a mutual association and its receipts would not constitute income chargeable to tax and is not obliged to withhold any tax without appreciating the facts.
On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in holding that the expenses incurred by the assessee company toward alleged reimbursement of cost is actually in the nature of royalty as laid down in section 9(1)(vi) of the l.T. Act.
On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in holding that such remittances constitute income of the foreign company for the purpose of section 195 of the l.T. Act and therefore, tax was liable to be deducted at source in respect of such expenditures.
On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) & 4503/Mum/2013 (A.Y.99-00, 01-2) erred in holding that the payments made by the assessee to KPMG international for names, mark and other facilities were in the nature of royalty and chargeable to tax in India.”
3. A the outset, the learned Counsel for the assessee stated that the assessee has shown payment of ₹ 51,67,822/- to KPMGI international situated in Switzerland (hereinafter referred as KPMGI)(including ₹8,07,463/- to KPMGI Asia Pacific Taiwan on behalf of KPMGI) which is stated to be mutual association of member firms, one of them being the assessee itself. This payment was disallowed in AY 1999-2000 under section 40(a)(i) while passing assessment order under section 143(3). The learned Counsel for the assessee in view of the above facts stated that the CIT(A) relying on the order for AY 2001-02 allowed the claim of the assessee by observing in Para 1.3.1 and 1.3.2 as under: - “1.3.1 It is seen that the CIT(A)-I0 vide his appellate order doted 31 January 2012 for AY 2001-02, examined the applicability of principles of mutuality with respect to the payments mode to KPMGI by the Appellant in detail and decided the matter in favour of the Appellant. The CIT(A)-10 has considered all the submissions of the Appellant and has given a categorical finding in para 5.15 of page 28 of the Order as "After examining the applicability of all the aforesaid decisions, it is clear to me that KPMGl is a mutual association and its receipts would not constitute income chargeable to tax. To this extent, even while making remittances to KPMGI, the appellant is not obliged to withhold any tax. & 4503/Mum/2013 (A.Y.99-00, 01-2) 1.3.2 In the light of above. I hold that the appellant was not required to deduct tax at source as the said sum was not chargeable to tax in India in view of doctrine of mutuality resulting in no element of income embedded in the remittances made by the Appellant to KPMGI hence not liable to tax under section 195 in view of decision in the case of GE India Technology Centre Pvt. Ltd. vs. CII (2010] 327 ITR 456(SC). Accordingly, disallowance of Rs.51,67,822/- made u/s. 40(a) (i) is deleted. This ground of appeal is therefore allowed.”
4. He stated that the Tribunal for AY 2001-02 in in assessee’s own case has finally upheld the principle of mutuality vide Para 19 as under: - “19. With the above discussion we may conclude that in the case in hand, there is a complete identity between the contributors and participators; the actions of the participators and contributors are in furtherance of the mandate of the association. There seems be no element of profit by the contributors from a fund made by them, which could only be expended or returned to themselves. Based on these conditions and respectfully relying on the case laws as the Hon’ble Apex Court and various High Courts laid down that the case of the assessee falls within the four corner of the ambit of the ‘Principle of Mutuality’. Thus, we do not find any reason or ground to interfere in the order passed by learned Commissioner ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) (Appeals) hence the appeal filed by the revenue is dismissed.”
And dismissed Revenue’s appeal.
He stated that there is no difference in facts in this year i.e. AY 1999-2000 and also in AY 2001-02. As the facts are exactly identical, query was put to the learned CIT Departmental Representative whether the issue is covered or not. He fairly considered that the issue is squarely covered.
After hearing both the sides and going through the facts and circumstances of the case, we find that the issue is squarely covered in favour of assessee by Tribunal’s decision for AY 2001-02 in vide order dated 07-04-2017. As the issue is squarely covered and there is no difference in the facts, we dismiss the Revenue’s appeal and this issue is allowed in favour of assessee.
The next issue in this appeal of Revenue is against the orders of CIT(A) in both the years, which is also identically worded and on identical facts, the following grounds is raised: - “5) On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in deleting the disallowance of Rs. 2,06,836/- u/s. 40(a)(i) being professional fees outside India without deduction of tax at source.”
At the outset, the learned Counsel for the assessee stated the facts that the assessee has made payment of professional fees of ₹ 20,06,836/- without deduction of tax at source to KPMG certification Netherlands towards assistance in execution of ISO 14001 certification work for various clients of the assessee. The AO made disallowance & 4503/Mum/2013 (A.Y.99-00, 01-2) under section 40(a)(i) as tax was required to be deducted at source from payments made outside India and the auditors had commented in Form 3CD that the amount was inadmissible under section 40(a)(i) of the Act. The CIT(A) allowed the claim of the assessee vide Para 2.3 and 2.3.1 as under: - “2.3 I have considered the facts and perused the material on record. The CIT(A) confirmed the disallowance only for the reason that tax was not deducted u/s.195 of the IT Act without examining the submissions made by the Appellant. The ITAT has directed the CIT (A) to decide afresh after examining the submissions made by the Appellant. It is seen that the Hon'ble Supreme Court in the case of GE India Technology Centre Pvt. Ltd. vs. CIT [2010] 327 ITR 456 has held that the payer has a right to determine the taxable income of payee at withholding tax stage. The Supreme Court has also laid down that tax is deductible at source under Section 195 of the Act only from 'sums chargeable to income tax' and the payer is not liable to deduct tax at source or make an application under Section 195 / 197 of the Act if such sum paid I payable to Non-Residents are not chargeable to tax under the Act. & 4503/Mum/2013 (A.Y.99-00, 01-2) 2.3.1 It is further seen that the services rendered by the non-resident do not fall within the ambit of Fees for Technical services under the India- Netherlands Tax Treaty. The remittance mode to the non-resident is on account of professional fees and as the non- resident does not have a permanent establishment in India as is understood in the Treaty, the income from the services is not taxable in India and consequently there is no requirement of deduction of tax at source.”
The learned Counsel for the assessee stated that this issue is squarely covered in favour of assessee’s by Tribunal decision in assessee’s own case for AY 2004-05 in order dated 22-02-2013, wherein Tribunal has dealt with issue as under: - “26. We have carefully considered the rival contentions and the case laws relied upon by either party. We find that the Assessing Officer has made the disallowance of the payment made to various persons mentioned above under section 40a(i) on the basis of the judgment of Hon'ble Supreme Court on Transmission Corporation of A.P. Ltd. (supra). Looking to the nature of services rendered by all these persons, which has been discussed in detail, it is seen that, firstly, none of these services fall in the nature of make available of any technical knowledge, experience, skill, know-how or process. The provisions of Indo- ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) U.S. and U.K. treaties are absolutely clear that in case of fees for technical services, it is essential that technical knowledge skill know- how should be made available to the assessee and the assessee should be at liberty to use them in its own right. If the service does not result in making available of any such thing, then the same would not fall within the ambit of fees for technical service. These payments also cannot be taxed under Article-7 as none of them were having any P.E. or fixed base in India and the duration of their visit in India was also for a very less period as has been discussed upon. Therefore, such a payment does not attract the provisions of TDS under section 195. Provisions of section 195(1) uses the expression “chargeable under the provisions of the Act”. The payer is bound to deduct tax at source only if the sum paid is assessable to tax in India. The obligation to deduct tax is limited to the appropriate proportion of income which is chargeable under the Act and not otherwise. The Hon'ble Supreme Court in G.E. India Technology Centre Pvt. Ltd.(supra), after analyzing the provisions of section 195 and the decision in Transmission Corporation of A.P. Ltd. (supra) has made a very important observation, which for the sake of ready reference, is reproduced below:-
7. Under s. 195(1), the tax has to be deducted at source from interest (other than & 4503/Mum/2013 (A.Y.99-00, 01-2) interest on securities) or any other sum (not being salaries) chargeable under the IT Act in the case of nonresidents only and not in the case of residents. Failure to deduct the tax under this section may disentitle the payer to any allowance apart from prosecution under s. 276B. Thus, s. 195 imposes a statutory obligation on any person responsible for paying to a non-resident, any interest (not being interest on securities) or any other sum (not being dividend) chargeable under the provisions of the IT Act, to deduct income-tax at the rates in force unless he is liable to pay income-tax thereon as an agent. Payment to non-residents by way of royalty and payment for technical services rendered in India are common examples of sums chargeable under the provisions of the IT Act to which the aforestated requirement of TDS applies. The tax so collected and deducted is required to be paid to the credit of Central Government in terms of s. 200 of the IT Act r/w r. 30 of the IT Rules 1962. Failure to deduct tax or failure to pay tax would also render a person liable to penalty under s. 201 r/w s. 221 of the IT Act. In addition, he would also be liable under s. 201(1A) to pay simple interest at 12 per cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. The most important expression in s. 195(1) consists of the words chargeable under the provisions of the Act". A person paying & 4503/Mum/2013 (A.Y.99-00, 01-2) interest or any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable to tax under the IT Act. For instance, where there is no obligation on the part of the payer and no right to receive the sum by the recipient and that the payment does not arise out of any contract or obligation between the payer and the recipient but is made voluntarily, such payments cannot be regarded as income under the IT Act. It may be noted that s. 195 contemplates not merely amounts, the whole of which are pure income payments, it also covers composite payments which has an element of income embedded or incorporated in them. Thus, where an amount is payable to a non-resident, the payer is under an obligation to deduct TAS in respect of such composite payments. The obligation to deduct TAS is, however, limited to the appropriate proportion of income chargeable under the Act forming part of the gross sum of money payable to the nonresident. This obligation being limited to the appropriate proportion of income flows from the words used in s. 195(1), namely, "chargeable under the provisions of the Act". It is for this reason that vide Circular No. 728, dt. 30th Oct., 1995 [(1995) 129 CTR (St) 1] the CBDT has clarified that the tax deductor can take into consideration the effect of DTAA in respect of payment of royalties and technical fees while deducting TAS. It may also be noted that s.
ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) 195(1) is in identical terms with s. 18(3B) of the 1922 Act. In CIT vs. Cooper Engineering Ltd. (1968) 68 ITR 457 (Bom) it was pointed out that if the payment made by the resident to the non-resident was an amount which was not chargeable to tax in India, then no tax is deductible at source even though the assessee had not made an application under s. 18(3B) [now s. 195(2) of the IT Act)]. The application of s. 195(2) presupposes that the person responsible for making the payment to the non-resident is in no doubt that tax is payable in respect of some part of the amount to be remitted to a non-resident but is not sure as to what should be the portion so taxable or is not sure as to the amount of tax to be deducted. In such a situation, he is required to make an application to the ITO(TDS) for determining the amount. It is only when these conditions are satisfied and an application is made to the ITO(TDS) that the question of making an order under s. 195(2) will arise. In fact, at one point of time, there was a provision in the IT Act to obtain a NOC from the Department that no tax was due. That certificate was required to be given to RBI for making remittance. It was held in the case of Czechoslovak Ocean Shipping International Joint Stock Co. vs. ITO (1971) 81 ITR 162 (Cal) that an application for NOC cannot be said to be an application under s. 195(2) of the Act. While deciding the scope of s. 195(2) it is important to note that the tax & 4503/Mum/2013 (A.Y.99-00, 01-2) which is required to be deducted at source is deductible only out of the chargeable sum. This is the underlying principle of s.
Hence, apart from s. 9(1), ss. 4, 5, 9, 90, 91 as well as the provisions of DTAA are also relevant, while applying TDS provisions. Reference to ITO(TDS) under s. 195(2) or 195(3) either by the nonresident or by the resident payer is to avoid any future hassles for both resident as well as nonresident. In our view, ss. 195(2) and 195(3) are safeguards. The said provisions are of practical importance. This reasoning of ours is based on the decision of this Court in Transmission Corporation (supra) in which this Court has observed that the provision of s. 195(2) is a safeguard. From this it follows that where a person responsible for deduction is fairly certain then he can make his own determination as to whether the tax was deductible at source and, if so, what should be the amount thereof. Submissions and findings thereon If the contention of the Department that the moment there is remittance the obligation to deduct TAS arises is to be accepted then we are obliterating the words "chargeable under the provisions of the Act" in s. 195(1). The said expression in s. 195(1) shows that the remittance has got to be of atrading receipt, the whole or part of which is liable to tax in India. The payer is bound to deduct TAS only if the tax (sic-income) is assessable in India.
ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) If tax (sic-income) is not so assessable, there is no question of TAS being deducted. [See : Vijay Ship Breaking Corpn. & Ors. vs. CIT (2008) 219 CTR (SC) 639 : (2008) 14 DTR (SC) 74 : (2009) 314 ITR 309 (SC) ]. One more aspect needs to be highlighted. Sec. 195 falls in Chapter XVII which deals with collection and recovery. Chapter XVII-B deals with deduction at source by the payer. On analysis of various provisions of Chapter XVII one finds use of different expressions, however, the expression "sum chargeable under the provisions of the Act" is used only in s.
195. For example, s. 194C casts an obligation to deduct TAS in respect of "any sum paid to any resident". Similarly, ss. 194EE and 194F inter alia provide for deduction of tax in respect of "any amount" referred to in the specified provisions. In none of the provisions we find the expression "sum chargeable under the provisions of the Act", which as stated above, is an expression used only in s. 195(1). Therefore, this Court is required to give meaning and effect to the said expression. It follows, therefore, that the obligation to deduct TAS arises only when there is a sum chargeable under the Act. Sec. 195(2) is not merely a provision to provide information to the ITO(TDS). It is a provision requiring tax to be deducted at source to be paid to the Revenue by the payer who makes payment to a nonresident. Therefore, s. 195 has to be read in conformity & 4503/Mum/2013 (A.Y.99-00, 01-2) with the charging provisions, i.e., ss. 4, 5 and 9. This reasoning flows from the words "sum chargeable under the provisions of the Act" in s. 195(1). The fact that the Revenue has not obtained any information per se cannot be a ground to construe s. 195 widely so as to require deduction of TAS even in a case where an amount paid is not chargeable to tax in India at all. We cannot read s. 195, as suggested by the Department, namely, that the moment there is remittance the obligation to deduct TAS arises. If we were to accept such a contention it would mean that on mere payment income would be said to arise or accrue in India. Therefore, as stated earlier, if the contention of the Department was accepted it would mean obliteration of the expression "sum chargeable under the provisions of the Act" from s. 195(1). While interpreting a section one has to give weightage to every word used in that section. While interpreting the provisions of the IT Act one cannot read the charging sections of that Act de hors the machinery sections. The Act is to be read as an integrated code. Sec. 195 appears in Chapter XVII which deals with collection and recovery. As held in the case of CIT vs. Eli Lilly & Company (India) (P) Ltd. (2009) 223 CTR (SC) 20 : (2009) 21 DTR (SC) 74 : (2009) 312 ITR 225 (SC) the provisions for deduction of TAS which is in Chapter XVII dealing with collection of taxes and the charging provisions of the IT Act form ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) one single integral, inseparable code and, therefore, the provisions relating to TDS applies only to those sums which are "chargeable to tax" under the IT Act. It is true that the judgment in Eli Lilly (supra) was confined to s. 192 of the IT Act. However, there is some similarity between the two. If one looks at s. 192 one finds that it imposes statutory obligation on the payer to deduct TAS when he pays any income "chargeable under the head salaries". Similarly, s. 195 imposes a statutory obligation on any person responsible for paying to a nonresident any sum "chargeable under the provisions of the Act", which expression, as stated above, do not find place in other sections of Chapter XVII. It is in this sense that we hold that the IT Act constitutes one single integral inseparable code. Hence, the provisions relating to TDS applies only to those sums which are chargeable to tax under the IT Act. If the contention of the Department that any person making payment to a non-resident is necessarily required to deduct TAS then the consequence would be that the Department would be entitled to appropriate the moneys deposited by the payer even if the sum paid is not chargeable to tax because there is no provision in the IT Act by which a payer can obtain refund. Sec. 237 r/w s. 199 implies that only the recipient of the sum, i.e., the payee could seek a refund. It must therefore follow, if the Department is right, that the law & 4503/Mum/2013 (A.Y.99-00, 01-2) requires tax to be deducted on all payments. The payer, therefore, has to deduct and pay tax, even if the so-called deduction comes out of his own pocket and he has no remedy whatsoever, even where the sum paid by him is not a sum chargeable under the Act. The interpretation of the Department, therefore, not only requires the words "chargeable under the provisions of the Act" to be omitted, it also leads to an absurd consequence. The interpretation placed by the Department would result in a situation where even when the income has no territorial nexus with India or is not chargeable in India, the Government would nonetheless collect tax. In our view, s. 195(2) provides a remedy by which a person may seek a determination of the "appropriate proportion of such sum so chargeable" where a proportion of the sum so chargeable is liable to tax. The entire basis of the Department's contention is based on administrative convenience in support of its interpretation. According to the Department huge seepage of revenue can take place if persons making payments to non-residents are free to deduct TAS or not to deduct TAS. It is the case of the Department that s. 195(2), as interpreted by the High Court, would plug the loophole as the said interpretation requires the payer to make a declaration before the ITO(TDS) of payments made to non-residents. In other words, according to the Department s. 195(2) is a ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) provision by which payer is required to inform the Department of the remittances he makes to the non-residents by which the Department is able to keep track of the remittances being made to nonresidents outside India. We find no merit in these contentions. As stated hereinabove, s. 195(1) uses the expression "sum chargeable under the provisions of the Act." We need to give weightage to those words. Further, s. 195 uses the word 'payer' and not the word "assessee". The payer is not an assessee. The payer becomes an assessee in default only when he fails to fulfill the statutory obligation under s. 195(1). If the payment does not contain the element of income the payer cannot be made liable. He cannot be declared to be an assessee-in- default. The abovementioned contention of the Department is based on an apprehension which is ill founded. The payer is also an assessee under the ordinary provisions of the IT Act. When the payer remits an amount to a non-resident out of India he claims deduction or allowances under the IT Act for the said sum as an "expenditure". Under s. 40(a)(i), inserted vide Finance Act, 1988 w.e.f. 1st April, 1989, payment in respect of royalty, fees for technical services or other sums chargeable under the IT Act would not get the benefit of deduction if the assessee fails to deduct TAS in respect of payments outside India which are chargeable under the IT Act. This provision ensures effective compliance & 4503/Mum/2013 (A.Y.99-00, 01-2) of s. 195 of the IT Act relating to TDS in respect of payments outside India in respect of royalties, fees or other sums chargeable under the IT Act. In a given case where the payer is an assessee he will definitely claim deduction under the IT Act for such remittance and on inquiry if the AO finds that the sums remitted outside India comes within the definition of royalty or fees for technical service or other sums chargeable under the IT Act then it would be open to the AO to disallow such claim for deduction. Similarly, vide Finance Act, 2008, w.e.f. 1st April, 2008 sub-s. (6) has been inserted in s. 195 which requires the payer to furnish information relating to payment of any sum in such form and manner as may be prescribed by the Board. This provision is brought into force only from 1st April, 2008. It will not apply for the period with which we are concerned in these cases before us. Therefore, in our view, there are adequate safeguards in the Act which would prevent revenue leakage. Applicability of the judgment in the case of Transmission Corporation (supra) In Transmission Corporation case (supra) a non-resident had entered into a composite contract with the resident party making the payments. The said composite contract not only comprised supply of plant, machinery and equipment in India, but also comprised the installation and commissioning of the same in India. It was admitted that the ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) erection and commissioning of plant and machinery in India gave rise to income taxable in India. It was, therefore, clear even to the payer that payments required to be made by him to the nonresident included an element of income which was exigilble to tax in India. The only issue raised in that case was whether TDS was applicable only to pure income payments and not to composite payments which had an element of income embedded or incorporated in them. The controversy before us in this batch of cases is, therefore, quite different. In Transmission Corporation case (supra) it was held that TAS was liable to be deducted by the payer on the gross amount if such payment included in it an amount which was exigible to tax in India. It was held that if the payer wanted to deduct TAS not on the gross amount but on the lesser amount, on the footing that only a portion of the payment made represented "income chargeable to tax in India", then it was necessary for him to make an application under s. 195(2) of the Act to the ITO(TDS) and obtain his permission for deducting TAS at lesser amount. Thus, it was held by this Court that if the payer had a doubt as to the amount to be deducted as TAS he could approach the ITO (TDS) to compute the amount which was liable to be deducted at source. In our view, s. 195(2) is based on the "principle of proportionality". The said sub- section gets attracted only in cases where the & 4503/Mum/2013 (A.Y.99-00, 01-2) payment made is a composite payment in which a certain proportion of payment has an element of "income" chargeable to tax in India. It is in this context that the Supreme Court stated, "If no such application is filed, income-tax on such sum is to be deducted and it is the statutory obligation of the person responsible for paying such 'sum' to deduct tax thereon before making payment. He has to discharge the obligation to TDS". If one reads the observation of the Supreme Court, the words "such sum" clearly indicate that the observation refers to a case of composite payment where the payer has a doubt regarding the inclusion of an amount in such payment which is exigible to tax in India. In our view, the above observations of this Court in Transmission Corporation case (supra) which is put in italics has been completely, with respect, misunderstood by the Karnataka High Court to mean that it is not open for the payer to contend that if the amount paid by him to the non-resident is not at all "chargeable to tax in India", then no TAS is required to be deducted from such payment. This interpretation of the High Court completely loses sight of the plain words of s. 195(1) which in clear terms lays down that tax at source is deductible only from "sums chargeable" under the provisions of the IT Act, i.e., chargeable under ss. 4, 5 and 9 of the IT Act. Before concluding we may clarify that in the present case on facts the ITA No. 4479 & 4503/Mum/2013 (A.Y.99-00, 01-2) ITO(TDS) had taken the view that since the sale of the concerned software, included a license to use the same, the payment made by appellant(s) to foreign suppliers constituted "royalty" which was deemed to accrue or arise in India and, therefore, TAS was liable to be deducted under s. 195(1) of the Act. The said finding of the ITO(TDS) was upheld by the CIT(A). However, in second appeal, the Tribunal held that such sum paid by the appellant(s) to the foreign software supplier was not a "royalty" and that the same did not give rise to any "income" taxable in India and, therefore, the appellant(s) was not liable to deduct TAS. However, the High Court did not go into the merits of the case and it went straight to conclude that the moment there is remittance an obligation to deduct TAS arises, which view stands hereby overruled. Since the High Court did not go into the merits of the case on the question of payment of royalty, we hereby set aside the impugned judgments of the High Court and remit these cases to the High Court for de novo consideration of the cases on merits. The question which the High Court will answer is—whether on facts and circumstances of the case the Tribunal was justified in holding that the amount(s) paid by the appellant(s) to the foreign software suppliers was not "royalty" and that the same did not give rise to any "income" taxable in India and, therefore, the appellant(s) was not & 4503/Mum/2013 (A.Y.99-00, 01-2) liable to deduct any tax at source? Subject to what is stated hereinabove, we set aside the impugned judgment(s) and remit these cases to the High Court to answer the question framed hereinabove. Accordingly, the appeal(s) filed by the appellant(s) stands allowed with no order as to costs.
In view of the aforesaid proposition of law, we hold that none of these payments which were not liable or chargeable to be taxed in India, no TDS was required to be deducted under section 195, therefore, the findings given by the Commissioner (Appeals) is factually and legally correct and, accordingly, the same is hereby affirmed. Ground no.2, raised by the Revenue is, thus, dismissed.”
When this was confronted to the learned CIT Departmental Representative, he fairly conceded the position.
We find that there is no difference in the facts and the issue is squarely covered in favour of assessee. Respectfully following the Tribunal’s decision in for AY 2004-05, we allow this issue in favour of assessee and the ground raised by Revenue is dismissed.
In the result, the appeals of Revenue are dismissed.
Order pronounced in the open court on 16-11-2017.