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2016 (7) TMI 580 - AT - Income TaxTDS u/s 195 - whether the payments made by the assessee to its foreign subsidiaries would fall under the ambit of ‘fees for technical services’ as per the DTAA - PE in India - Held that:- We find that as per Article 7 of UK and Singapore Treaty, in the absence of PE in India, the business income also would not get taxed in India. Hence we hold that the payment made by the assessee to its subsidiaries is not chargeable to tax in India in the hands of the subsidiaries in India. The provisions of section 195(1) of the Act mandates a requirement that the income should be chargeable to tax in India to assume jurisdiction in India. In the instant case, it is proved beyond doubt that the subsidiaries do not have any income chargeable to tax in India and hence the decision rendered by the Hon’ble Apex Court in the case of GE India Technology Centre P Ltd vs CIT reported in (2010 (9) TMI 7 - SUPREME COURT OF INDIA ) supports the case of the assessee. Thus we have no hesitation in directing the Learned AO to delete the disallowance made u/s 40(a)(i) of the Act in respect of payments made to foreign subsidiaries. - Decided in favour of assessee Disallowance made u/s 14A - Held that:- We hold that the investments made in subsidiary companies are to be treated as strategic investments and hence the disallowance u/s 14A of the Act would not operate at all as the investment made thereon is not with an intention to earn any exempt income in the form of dividend but only for obtaining controlling interest in the said companies and to further the business interests of the assessee in the said company. Thus we hereby direct the Learned AO to recomputed the disallowance u/s 14A of the Act after eliminating the strategic investments made in subsidiaries and investments yielding taxable income. - Decided in favour of assessee for statistical purposes. Disallowance of club expenses - Held that:- We find that the Learned CITA had observed in his order that the assessee had not provided even the basic details as to in whose name the membership is taken and who were the other persons visiting in the name of the Director and whether it was in the name of individual or corporate membership. We find that these facts are crucial for the purpose of deciding the issue. Hence we deem it fit and appropriate to set aside this issue to the file of the Learned AO to decide this issue afresh, in accordance with law, with a direction to the assessee to produce the necessary evidences in support of its claim. - Decided in favour of assessee for statistical purposes.
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