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2019 (8) TMI 697 - AT - Income TaxTDS u/s 195 - assessee is a Indian company and the payees are foreign companies based in US, Ireland, Singapore, Australia, Israel etc. with their residential status being that of resident and non-resident respectively - default u/s. 201(1) - DTAA provisions - HELD THAT:- Assessee has raised common grounds of appeal feeling aggrieved by the order of AO, and on the issue of DTAA, the assessee had raised general ground and therefore, in our considered opinion, there is no prohibition for the AO to pass a common order for all the assessment years. In all the cases before the AO, the payee (recipient) was non-resident. It is not disputed that payment was made for purchase of software. It is also not disputed before the AO that tax was not deducted as mandated by law before making payment. Therefore, all the necessary conditions as required under law for invoking provisions of s. 201 were in place and therefore in our view, the action on the part of lower authorities is in accordance with law. We hold accordingly. Regarding the arguments of the learned AR of the assessee that the orders passed by the AO are time barred, we respectfully follow the tribunal order in the case of Google as reproduced above and hold that these orders are not time barred as these are passed within six years. In the result, all the six appeals filled by the assessee in the proceedings u/s 201 & 201 (1A) are dismissed. Mistake rectifiable u/s 154 - addition of grossing up of tax u/s 195A - HELD THAT:- There may be an argument that it is not an apparent mistake rectifiable u/s 154, the AO has also increased the demand in respect of Surcharge and Education Cess and it is a fact that the demand of TDS is as per provision of Income Tax Act in some years where the rate of withholding tax as per DTAA is higher and hence, not raising demand in respect of Surcharge and cess is an apparent mistake rectifiable u/s 154 and therefore, we hold that these orders u/s 154 are not bad in law although some demands raised in these orders may be bad in law and the same can be deleted on merit. Rate of tax is 15% in USA, UK, Austria and Canada and 20% in Spain because as per the assessee it is 10% for these countries also - HELD THAT:- We find that as per Para 13 of the combined impugned order, learned CIT (A) has directed the AO to levy surcharge and cess only in respect of royalty payments made to vendors which are resident of such countries with which the DTAA with India allows withholding of more than 11.33% and in respect of other payments, he has deleted the levy of surcharge and cess. Hence, we find no merit ion these grounds also and these are also rejected. Interest u/s 201 (1A) - HELD THAT:- This is a settled position of law as per the judgment of Hon’ble apex court rendered in the case of Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT 2007 (8) TMI 12 - SUPREME COURT] that if tax is paid by the deductee, demands from deductor for tax u/s 201 (1) cannot be raised but the deductor has to pay interest u/s 201 (1A) till the date of payment taxes by the deductee. Hence, in our considered opinion, the ratio of this judgment is this that if tax was deductible by the payer, interest u/s 201 (1A) is payable by him till the payment of such tax by him or by the payee. Accordingly, we hold that there is no merit in Ground No. 7 and it is also rejected. Rectification u/s 154 - HELD THAT:- A categorical finding is given by CIT (A) that as per the agreements between the assessee company and various parties to whom payments were made, the assessee company had to deduct TDS if required by law or by the income tax authorities and hence, there is no basis to infer that the assessee company had to bear the cost of taxes payable on remittances was to be borne by the assessee company. This finding of CIT (A) could not be controverted by the learned DR of the revenue and we find no infirmity in the ultimate finding of CIT (A) that there was no apparent mistake in the order passed by the AO which can be rectified u/s 154 On this aspect, we uphold the order of CIT (A). These grounds are rejected. Levy of surcharge and cess - This is the case of the department that in respect of royalty payment to those countries also for which DTAA prescribes withholding tax rate of 10%, surcharge and cess should be levies because no proof is brought on record by the assessee about proof of residency of those parties in those countries - HELD THAT:- It is stated by CIT (A) that the assessee has submitted the details regarding software payments, name of vendor, country of vendor and amount paid and he has also stated in the same Para that he has gone through the details carefully. He has noted in the same Para that it was claimed by the assessee before him that withholding tax rate for payment of royalty to all countries in dispute except Greece is 10% but he has held that this claim is not correct and he has noted the withholding tax rate on payment of Royalty in respect of USA, UK, Austria, and Canada is 15% and the same for Spain is 20%. This shows that learned CIT (A) has not accepted the claim of the assessee without examination and verification. Hence, if this is the contention of the revenue that the vendors of Ireland, Netherland, Singapore, Israel, France, Germany, Australia and Belgium etc. are not residents of respective countries, the revenue should have brought on record some evidence in this regard. In the absence of any evidence even in one case that the vendor of a country of 10% withholding tax rate is in fact resident of some other country having higher withholding tax rate, we do not find any reason to interfere in the order of CIT (A). This Ground is also rejected.
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