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2006 (7) TMI 529 - AT - Income TaxLiability to deduct tax u/s 195 - interest paid to non-resident bank - deduction of tax u/s 194J - manufacturing business - whether the holding company, i.e., M/s. SIEL has rendered any technical or professional services to the assessee - HELD THAT:- In this case M/s. Andhra Bank debited the interest in the account of the assessee, which is maintained with them. The fact remains that the immediate responsibility for paying interest is that of Andhra Bank and not the assessee. The Legislature has used the words "any person responsible for paying". In this case the responsibility is of Andhra Bank and not of the assessee. The payment might have been made on behalf of the assessee but that does not take away the responsibility of Andhra Bank from paying interest to the foreign bank. In these circumstances it may not be proper to say that the assessee failed to deduct tax while paying interest to the foreign banker. In these circumstances, the responsibility for making payment of interest is only on Andhra Bank and not on the assessee and if at all any tax is to be deducted it has to be done by Andhra Bank and not the assessee. Thus, we are unable to uphold the order of the lower authorities and accordingly the same is set aside. Deduction of tax u/s 194J - HELD THAT:- The services rendered by the holding company in the areas of accountancy; human resources development and taxation would definitely fall within the field of technical services. If at all it is not technical service, it may be considered to be professional service. The advice or service rendered by holding company in respect of human resources development, maintenance of accounts and finance would definitely amount to providing services in managerial/technical field as defined in Explanation (2) to section 9(1)(vii) of the Act. Therefore, in our opinion, the assessee is liable to deduct tax u/s 194J of the Act. However, as rightly submitted by the ld DR, the Commissioner (Appeals) has directed the Assessing Officer to verify whether the holding company M/s. SIEL has offered the amount for taxation or not. The CIT (Appeals) directed the Assessing Officer to modify the demand raised u/s 201(1A) after such verification. Therefore, the assessee may not have any grievance at all. Accordingly we confirm the order of the first appellate authority on this issue. In the result, I.T.A. No. 151/Hyd./02 is allowed while I.T.A. No. 152/Hyd./02 is partly allowed.
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