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2010 (4) TMI 784 - AT - Income Tax
Assessee in default - TDS u/s 195 - Fees for technical services - The agreement entered into by the assessee with IMAX is very clear. The total purchase price for the system and the technology transfer fee is stated to be US $ 23,15,000. It also specifics that out of the above sum, US $ 13,65,000 is for the purchase of the system and US $ 9,50,000 is the fee for transfer of technology. Schedule C to the agreement is also very clear to point out that IMAX is to install the equipment/test it and also provide training for upto four projectionists - These services are auxiliary to the sale of the equipment
The payment of US $ 9,02,500 is a part of the equipment price which includes the services of installation and training. Therefore, it follows that the said sum of US $ 9,02,500 is not chargeable to tax in India and hence the assessee was justified in not deducting any tax at source - Decided in favor of the assessee.
If the assessee has not applied to the AO under s. 195(2) for deduction of tax at a lower or nil rate of tax under a bona fide belief that no part of the payment made to the non-resident is chargeable to tax, then he is not under any statutory obligation to deduct tax at source on any part of the payment.