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2016 (3) TMI 207 - AT - Income TaxTDS u/s 195 - Addition u/s 40(a)(ia) - amount reimbursed to M/s Aakriti Creations Pvt. Ltd - whether these are genuine reimbursement of expenses and there was no profit element and hence no income liable to tax was contained therein ? - Held that:- Hon’ble Delhi High Court in case of Van Oord ACZ India (P) Ltd. vs. Commissioner of Income Tax [2010 (3) TMI 167 - DELHI HIGH COURT] held that liability to deduct at source arises only when the sum is paid to the non-resident was chargeable to tax. Once that was chargeable to tax, it was not for the assessee to find out how much amount of the receipts was chargeable to tax, but it was the obligation of the assessee to deduct the tax at source on the entire sum paid by the assessee to the recipient. Under Section 195, the obligation to deduct tax at source was attracted only when the payment was chargeable to tax in India. Thus as pointed out by the CIT(A) in the order the Hon’ble Delhi High Court held that no liability for deduction of tax at source arose under Section 195 in the case of mobilization and demobilization costs reimbursed to a non-resident, not being taxable in India, hence disallowance under Section 40(a)(ia) did not arise. Recently, in case of CIT vs. Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] it was held that what is common to both proviso to Section 40(a)(ia) and Section 210(1) of the Act is that as long as the payee/resident has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. As far as the present case is concerned, it is not disputed by the Revenue that the payee has filed returns and offered the sum received to tax. In view of this the order of the CIT(A) is upheld. - Decided in favour of assessee
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