Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 493 - DELHI HIGH COURTTDS u/s 195 - withholding tax deducted at source (TDS) - AWS India’s obligation to withhold and deposit the tax in respect of payments to AWS USA - PE in India or not? - HELD THAT:- We are, prima facie, unable to accept that the entire amount payable by AWS India to AWS USA can be considered as revenue attributable to AWS’s PE (if any) in India and that no part of it is attributable towards entities overseas. The exercise conducted by the AO of determining the revenue attributable to a PE, which also requires allowance for deduction of material expenses to be made is clearly flawed. It is also settled law that the proceedings u/s 195(2) are only for the purpose of determining the proportion of income chargeable to tax for the limited purpose of determining the withholding of tax. The determination under Section 195(2) of the Act does not constrain the Revenue in any manner from correctly assessing the payee’s income chargeable to tax in accordance with the law. It would, prima facie, follow that if there is already a determination in the payee’s own case; the AO would normally give due consideration to the same, in considering the application under Section 195(2) - in this case it appears that the AO has proceeded on the exercise of a de novo assessment in proceedings, completely disregarding the orders of the ITAT arising from the assessment proceedings relating to AWS USA’s. We also find merit in the Revenue’s contention that AWS India had not provided AWS USA’s financial information for the preceding years, which may be essential in determining the application under Section 195(2) of the Act. We are unable to appreciate AWS India’s response that the entire information related to AWS USA is available on the portal of the Department and thus could be retrieved by the AO. For the purpose of Section 195(2) of the Act, the applicant is required to provide the necessary information. It would not be open for the applicant to refrain from providing the same on the ground that AO may be able to access the same otherwise. Revenue has already issued notices u/s 148 of the Act for re-opening the assessments of AWS USA. As noted ASG has stated that there is substantial information available with the Revenue to assess AWS USA’s income as chargeable to tax under the Act. He had also contended that AWS USA had withheld vital information in the assessment proceedings. Revenue now seeks to re-look at AWS USA’s assessment and chargeability of its income to tax in India. Considering that the nature of these proceedings is confined to withholding of tax, and that the financial year 2022-23 is already over, this Court had suggested to the parties that without prejudice to their rights and contentions regarding the chargeability of AWS USA’s income under the Act, a total of 10% be withheld (less 2% Equalisation Levy that has already been paid) as withholding tax. The impugned order is modified to the aforesaid extent. AWS India shall withhold 8% of payments, payable or paid to AWS USA, for the period in question and deposit the same with the Revenue authorities.
|