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2013 (3) TMI 756 - AT - Income TaxDisallowance for non-deduction/ non-payment of TDS u/s 40(a)(ia) - TDS on Non- Resident Payments u/s 195 - Amount was paid by the assessee to its holding company in Netherlands, which was in turn paid by the holding company to trainers for providing training to assessee's employees. AO observed that the provisions of s.195 were attracted in respect of such payment, for which assessee was required to deduct tax at source before remitting the said payment, which it did not. AO made the disallowance invoking the provisions of s. 40(a)(ia). - HELD THAT:- For invoking the provisions of s. 40(a)(ia), it is of paramount importance to ascertain the chargeability of the amount to tax in the hands of such trainers who were eventual receivers. Otherwise, the provisions of section 195 cannot apply and ex consequenti, the application of s. 40(a)(ia) is ruled out. AO directed to decide the question of chargeability then decide the whether s. 40(a)(ia) applies or not. - Matter restored back.
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