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2018 (11) TMI 330 - HC - Income TaxTDS u/s 195 - payments made to a non resident - DTAA between India and UK - income accrued to India - principle of grossing up - Held that:- In the decision in the case of M/s.TVS Motor Company Ltd. Vs. ITO [2018 (9) TMI 81 - MADRAS HIGH COURT], to which, one of us (TSSJ) was a party, this Court decided the substantial question of law against the assessee. In the absence of the definition of “income” and definition of “gross amount” under the treaty, the assessee has to necessarily compute the income in terms of Section 195A of the Act. Admittedly, in the instant case, there is no exemption granted under Section 10(6A) of the Act for the assessee to contend that the said payment does not form part of total income. For the purpose of deduction of tax at source on the payment made by the assessee to the University of Warwick, the income should be computed in terms of the provisions of the Act and in so doing, it shall be increased by taking into consideration the amount of tax liability undertaken to be borne by the assessee. In other words, the obligation to pay the tax is on the University of Warwick and since the assessee in terms of the agreement agreed to pay the taxes, the same has to be necessarily added to the income of the University of Warwick and therefore, the principle of grossing up has to be applied. No hesitation to hold that the Assessing Officer, the CIT(A), and the Tribunal rightly held that the principles of grossing up would apply to the assessee's case.
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