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2021 (7) TMI 103 - AT - Income TaxTDS u/s 195 - Disallowance u/s 40(a)(i) - deduction of tax in respect of Global Account Coordination cost - scope of amendment - HELD THAT:- As decided in ASHAPURA MINICHEM LTD. VERSUS ADIT (INT’L TAXATION) [2010 (5) TMI 523 - ITAT, MUMBAI] prevailing legal position was that unless the technical services were rendered in India, the fees for such services could not be brought to tax under section 9(1)(vii). The law amended was undoubtedly retrospective in nature but so far as tax withholding liability is concerned, it depends on the law as it existed at the point of time when payments, from which taxes ought to have been withheld, were made. The taxdeductor cannot be expected to have clairvoyance of knowing how the law will change in future. A retrospective amendment in law does change the tax liability in respect of an income, with retrospective effect, but it cannot change the tax withholding liability, with retrospective effect. The tax withholding obligations from payments to non-residents, as set out in Section 195, require that the person making the payment "at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income -tax thereon at the rates in force". When these obligations are to be discharged at the point of time when payment is made or credited, whichever is earlier, such obligations can only be discharged in the light of the law as it stands that point of time. We are in agreement with the view expressed by the Co-ordinate Bench. Therefore, we hold that the Assessing Officer was not justified in fastening the liability of tax deduction by relying on the amendment which was inserted in the year 2010 with retrospective effect from 01.04.1976. The Assessment Year in question is 2008-09, therefore, provision of section 40(a)(i) of the Act ought not to have been invoked in the case of the assessee. Therefore, we direct the Assessing Officer to delete the addition. Thus, grounds raised by the assessee in this appeal are allowed.
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