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2023 (6) TMI 731 - AT - Income TaxTDS u/s 195 - Addition u/s 40(a)(ia) - remittance made towards fee for technical services chargeable to tax u/s.9(1)(vii) - assessee has debited an expenditure paid to sister concerns under the head "HS Pure Power Programme" on which tax was not deducted at source - HELD THAT:- The Indian facility of the assessee company was not established in its full strength during the period and it was necessary to get the hardware parts as specified in the agreement. In order to get this work done, the assessee company approached its sister concern TASE India, which was well equipped with the necessary facilities for carrying out the manufacturing work. The invoices were raised by the TASE USA and then re-imbursement of first phase expense of Pure Power Project was made. Thereafter, certain costs were incurred by TASE USA on the said project but subsequently, when the contract got terminated by Hamilton Sundstrand Corporation in the year 2011, the balance amount lying with TASE USA was refunded to the assessee. Looking into these transactions with the angle of the application of Section 195 we notice that in the alleged payments made by the assessee to its sister concern TASE USA, there is no element of income and it is purely reimbursement of expenses and as held in the case of GE India Technologies Pvt. Ltd. [2010 (9) TMI 7 - SUPREME COURT] obligation to deduct tax at source u/s 195 does not arise at the moment the payment is made to a non-resident but arises only when such remittances is a sum chargeable to Income Tax u/s 4, 5 and 9 the same ratio applies on the facts of the instant case and, therefore, no tax was deductible by the assessee company on the alleged payments. CIT(A) was justified in deleting the addition/disallowance made - Appeal of the revenue is dismissed.
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