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2016 (8) TMI 1551 - AT - Income TaxRectification u/s 254 - ITAT held that the assessee being an AOP is not required to deduct tax at source for making payment to its constituent companies - HELD THAT:- Tribunal has given a finding that the assessee, being an AOP/JV, is not required to deduct tax at source from the payments to the constituents towards their share of work carried out by them. Tribunal thought it fit to direct the A.O. to verify whether Chinese concern has offered its income to tax in India and has also directed the A.O. to bring the same to tax in India if it is found that the non-resident has not offered this amount as part of their taxable income in India. We find that the above observation or direction is only means that the A.O. may take suitable action for bringing the amount to tax in accordance with the provisions of the Act. Whether it is only an observation or a direction, in our opinion, to take a suitable action, A.O. has to follow the relevant provision of law. It is a settled position that before bringing to tax any income of a non-resident, the A.O. has to examine as to whether such income is taxable in India. The conditions precedent for bringing to tax such amount have to be satisfied before the A.O. can take recourse to bringing the same to tax in India in the hands of the assessee. Therefore, in our opinion, there is no mistake committed by the Tribunal in giving such observation/direction but in our opinion, it would be in the fitness of the case and justice if the following the words are added at the end of para-12 : “Only if the said income is chargeable to tax in India”. M.As. of the assessee are partly allowed.
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