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2011 (11) TMI 503 - ITAT DELHI
Italian Thai Development Public Co. Ltd. Versus Assistant Director of Income-tax, Circle 1(2), New Delhi

TDS on upfront fees paid - Deduction u/s 40(a)(ia) dis-allowed - foreign company - liaison office in India – Held that:- Upfront fee of US$2 lakh paid to Standard Chartered Bank, Thailand to coordinate all agreement with it with tax on the said upfront fee to be borne by the assessee. US$ 2,00,000 equivalent to Rs. 89,34,000/- was grossed-up to the tune of Rs. 1,13,30,362/- out of which, a tax of Rs. 23,96,362/- was deducted and deposited by the assessee in the Government account. Thus payment of Rs. 23.96 lacs being amount of TDS and paid to the Government account for and on behalf of SCB, Bangkok is to be treated as a part of upfront fees paid by the assessee, and since the payment of Rs. 89.34 lacs is net of the taxes paid by the assessee has been allowed as a revenue deduction by the AO, the payment of Rs. 23.96 lacs being part of the same consideration shall also be eligible as a revenue deduction.

Similarly, the payment of Rs. 20,000/- towards bank charges for remitting the upfront fees from India to Thailand shall also be allowed as a revenue deduction – Decided in favor of assessee.