Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 1501 - AT - Income TaxDisallowance u/s 40(a)(ia) of the Act – TDS not deducted on training expenses – DTAA treaty between India and US - Scope of Article 12 of DTAA - Held that:- The Assessing Officer has disallowed the payment in question as per the provisions of section 9(1)(vii) without considering the provisions of DTAA - prior to the assessment year 2006-07 there is no disallowance by the AO u/s 40(a)(i) - the assessee cannot be expected to do something which were impossible to perform – Relying upon Sterling Abraive Ltd. v. Asstt. CIT [2010 (7) TMI 803 - ITAT AHMEDABAD] - the assessee acted bona fide in conformity with the provision of act - At the relevant point of time it was impossible on the part of the assessee to deduct tax on the income of non-resident - up to the insertion of explanation vide Finance Act, 2007, the assessee was under bona fide belief not to deduct tax and accordingly he acted as per law - the assessee has acted under bonafide belief that no tax was to be deducted at source on these payments. Apart from the bonafide belief we further noted that as per para 4(b) of Article 12 of Indo-US DTAA fees for included services means if such services made available technical knowledge, experience, skill, know-how, or processes, or consists of the development and transfer of a technical plan or technical design. The training was given to the pilots and other staff as per the requirement of the DGCA Rules – thus, it was only a part of the eligibility of the pilots and other staff for working in the industry of aviation and such training would not fall under the term "service make available" - the disallowance of u/s 40(a)(i) is not justified and accordingly the same is deleted – Decided in favour of Assessee.
|