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2019 (3) TMI 1834 - AT - Income TaxTDS u/s 194J - disallowance of data processing cost u/s.40(a)(ia) - Non deduction of TDS - whether data processing cost paid to head office is in the nature of royalty as per Clause-3, Explanation 1 to Section 9(1)(vi) of the Income Tax Act, 1961 which is liable for withholding tax u/s.194J? - HELD THAT:- Similar issue has been the subject matter of discussions by the Co-ordinate Benches of ITAT in assessee’s own case for the A.Y.2012-13 wherein after considering relevant provisions of the Act, and also scope of Article 12(3)(a) of DTAA between India and Netherlands held that data processing cost did not constitute royalty and is merely reimbursement of expenses not liable for withholding tax and therefore, no disallowance could be made u/s.40(a)(i). Disallowance of interest paid to head office and taxability of the same in the hands of the head office - HELD THAT:- In assessee’s own case for earlier years Tribunal after considering relevant facts in the light of the provisions of Article 11 of DTAA between India and Netherlands hold that interest paid by the branch office to head office is not chargeable to tax in view of the specific provisions of Article 11 of DTAA between India and Netherlands - CIT(A) was right in deleting the addition made by the AO towards disallowance of interest paid to head office. Hence, we are inclined to uphold the findings of the ld. CIT(A) and reject the ground taken by the revenue. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As with view taken by the Co-ordinate Bench in assessee’s own case for earlier years, we are of the considered view that there is no error in the findings of the ld. CIT(A) in deleting additions made towards disallowance of expenditure incurred in relation to exempt income u/s. 14A of the Act. Hence, we are inclined to upheld the findings of ld. CIT(A) and reject the ground taken by the revenue.
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