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2022 (1) TMI 33 - AT - Income TaxTDS u/s 195 - disallowance of commission expenses u/s.40(a)(i) for non-deduction of tax at source - HELD THAT:- We hold that the payments made by the assessee to foreign agents are mainly towards marketing services only. Other services rendered by them are in the nature of support services only, which are incidental to the main marketing support services - we hold that these services do not fall under the category of Fee for technical services. Following the decision rendered by the co-ordinate bench in the assessee's own case AY 2010-11 and 2011-12 [2019 (7) TMI 865 - ITAT BANGALORE] and also the decision rendered in AY 2013-14 [2021 (6) TMI 1081 - KARNATAKA HIGH COURT] in assessee's own case, we hold that no income chargeable in India has accrued in the hands of the foreign agents. Accordingly, we hold that the assessee is not liable to deduct tax at source from the payments made to the foreign agents. Accordingly, we set aside the orders passed by Ld CIT(A) on this issue in all the three years under consideration and direct the AO to delete the disallowance made u/s. 40(a)(i). TP adjustment - transfer pricing adjustment in respect of transactions relating to provision of software services - HELD THAT:- We notice that the co-ordinate bench has directed exclusion of Infosys Ltd., Larsen and Toubro Infotech Ltd. and Persistent Systems Ltd. in the case of SAP Labs India P Ltd [2021 (7) TMI 1301 - ITAT BANGALORE] wherein it has followed the decision rendered by another co-ordinate bench in the case of NXP India P Ltd. [2020 (5) TMI 86 - ITAT BANGALORE]. Negative working capital - It is the contention of the assessee that the negative working capital should be ignored, since the assessee is a risk free enterprise - A.R placed his reliance on the decision rendered in the case of ACIT vs. e4e Business Solutions India P Ltd. [2020 (12) TMI 1255 - ITAT BANGALORE] wherein it has been held that the negative working capital should be ignored, since it artificially increases Arms Length Price. Accordingly, we restore this issue to the file of TPO with the direction to follow the principles laid down in the case of e4e Business solutions India P Ltd. (supra).
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