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2022 (9) TMI 824 - AT - Income TaxTDS u/s 195 - disallowance u/s 40(a)(i) - assessee has paid management fees to company in Australia - assessee made application for granting certificate for Nil rate of TDS - HELD THAT:- DCIT (International Taxation) passed order u/s 195(2) of the Act, after taking note of the agreement entered into between the assessee and the Australian entity for providing administration/business support services, came to the conclusion that assessee is not liable for tax in India as per Article 12(3)(g) of DTAA as the support services intended to be provided by the Australian entity to the assessee does not result in making available any technical knowledge, experience, skill, know-how or processes or consist of the development and transfer of a technical plan or design. DCIT (International Taxation) also held that the said services are also not liable to be taxed under Article 7 read with Article 5 of India Australia DTAA, as the Australian entity doesn’t have any PE in India. Accordingly, assessee was directed to withhold taxes at Nil under section 195(2) while making payment to Cover More Insurance Services Pty Ltd, during the financial year 2016–17. We find that similar Nil withholding tax certificates were issued by the Competent Authority relevant for assessment years 2018–19, 2019–20, 2020–21 and 2021–22. Hon’ble Supreme Court of India in GE India Technology Cen. (P.) Ltd. [2010 (9) TMI 7 - SUPREME COURT] held that section 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. Once, the assessee has sought the remedy provided under the Act and the Competent Authority of the Income Tax Department after consideration of the facts, which are similar to the facts for the year under consideration, came to the conclusion under section 195(2) of the Act that Nil tax is liable to be withheld, in such a situation submission of the Revenue that assessee has failed to deduct tax at source on the payment made to the Australian entity is completely contrary to its own determination of such liability in the case of assessee. In view of the above, we find no infirmity in the impugned order passed by the learned CIT(A). Accordingly, all the grounds raised by the Revenue are dismissed.
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