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2018 (12) TMI 1146 - HC - Income TaxTDS u/s 195 - disallowance u/s 40 (a)(i) - non deduction of tds on fees for technical services to one foreign based company M/s. Pacific Hub Corporation, Philippines - Income deeded to accrue or arise in India - whether payment received by PHP, Philippines was deemed to be income of PHP Philippines in terms of Section 9[1](vii) read with Section 5 [2] - Held that:- In the present case, the Commissioner [Appeals] and the Tribunal have accepted assessee’s factual assertion that the payments were for technical services provided by a nonresident, for providing services to be utilized for serving the assessee’s foreign clients. Thus, the fees for technical services was paid by the assessee for the purpose of making or earning any income from any source outside India. Clearly, the source of income namely the assessee’s customers were the foreign based companies. In the view by a judgment of Karnataka High Court in the case of Commissioner of Income tax, Bangalore v. ITC Hotels Limited, reported in [ [2015 (8) TMI 987 - KARNATAKA HIGH COURT]] in which it was held that where the recipient of income of parent company is not chargeable to tax in India, then the question of deduction of tax at source by the payer would not arise. Delhi High Court in the case of Commissioner of Income tax vs. Havells India Limited, reported in [2012 (5) TMI 449 - DELHI HIGH COURT] was of the opinion that the payment made by the assessee to a US based company for certification facilitating export was not in relation to the source of income which was based in India. The facts were thus different. In the present case, we have primarily gone on the question of the nature of assessee’s activities and the nature of services rendered by the parent based company, for which commission was paid. - Decided against revenue
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