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2017 (4) TMI 1027 - AT - Income TaxTDS u/s 195 - Disallowance u/s. 40(a)(i) - payment made to non- residents situated outside India without the deduction of tax source - payment of warehouse charges - Held that:- Admittedly the disallowance made by the Ld. AO is only for non- deduction of tax at source and accordingly only the provisions of section 40(a)(i) of the Act is invoked by him. There is no dispute as to the allowability of such payments as an eligible deduction otherwise. We also find that expecting a person to foresee the future amendment in the statute vis-a- vis tax withholding liability would only result in impossibility of performance on the part of the tax deductor. We also find that the Hon'ble Supreme Court in the case of Krishnaswamy S. Pd. and Anr. v. Union of India (2006 (2) TMI 75 - SUPREME Court ) has also accepted and approved this legal maxim. In view of these findings and respectfully following the various judicial decisions relied upon herein above, we have no hesitation in directing the Ld. AO to delete the disallowance of payment of warehouse charges u/s. 40(a)(i). Payment of warehousing charges to Camrette Logistics Inc. USA - Held that:- Applying the definition of FIS in the Treaty to the facts of the present case in the light of the various decisions referred to above, it cannot be said that the rendering of services by the non residents to the assessee made available to the assessee, such services , for its future use or utilization on a reasonably permanent basis. Hence the payments made thereon by the assessee would not fall under the ambit of fees for technical services or fees for included services as per the treaty. The provisions of section 90(2) of the Act are very clear that the assessee is entitled to take the benefit of the treaty if the same is beneficial to it. Hence the provisions of the treaty would prevail over the Act. - Decided in favour of assessee. Disallowance made u/s 40(a)(i) in respect of payments made for professional / technical services -Held that:- We find from the nature of services rendered by TRW Automobile Japan and TRW Automobile USA , though the same fall under the ambit of Fees for Technical Services as per the provisions of the Act, but the same does not fall as such as per the respective DTAAs in view of the fact that it cannot be said that the rendering of services by the non residents to the assessee made available to the assessee , such services , for its future use or utilization on a reasonably permanent basis. For the detailed reasoning given on the make available theory, we hold that the subject mentioned payments made to TRW Automobile Japan and TRW Automobile USA by the assessee would not fall under the ambit of fees for technical services or fees for included services as per the treaty. The provisions of section 90(2) of the Act are very clear that the assessee is entitled to take the benefit of the treaty if the same is beneficial to it. Hence the provisions of the treaty would prevail over the Act. Hence we hold that the assessee is not obligated to deduct tax at source and hence no disallowance u/s 40(a)(i) - Decided in favour of assessee.
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