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2017 (4) TMI 60 - AT - Income TaxTDS u/s 195 - non deducted tax at source on the remittances to its AE - default under section 201(1) - whether amounts remitted by the assessee to its Associated Enterprises (AE) in this period was exigible to tax as ‘royalty’ under section 9(1)(vi) of the Act as well as Article 12(3)(a) of the India-Singapore DTAA - Held that:- Special Bench of ITAT, Mumbai in the case of Mahindra & Mahindra Ltd. (2009 (4) TMI 207 - ITAT BOMBAY-H ) we hold that in order to treat the assessee/payee as an assessee in default it is required that the income so paid or credited to the account of the payee/recipient is capable of being brought within the tax net and such assessments should be lawfully made by the AO on the payee/recipient. Since these two conditions as required by Explanation to section 191 of the Act have not been satisfied, the orders of the AO under section 201(1) r.w.s. 201(1A) of the Act for assessment year 2007-08 and 2008-09 treating the assessee as an assessee in default under section 201(1) of the Act and thereby raising tax liability and charging interest thereon under section 201(1A) are unsustainable in law and are accordingly cancelled. - Decided in favour of assessee
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