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2011 (3) TMI 202 - AT - Income TaxDisallowance - It was in the knowledge of the assessee that they have to bear the withholding tax liability even though Tata Elxsi has appointed DLF, a non resident concern for executing the work - it is clear that what is being paid by the Indian resident payer, be it TATA Elxsi or the assessee when they reimburse TATA Elxsi, is only the income of the Non Resident payable as tax to the India Government - Held that:- Whenever Payer bears the withholding tax, such amount is deemed to be the income of the assessee and the tax to be paid is grossed up - TDS borne by the Resident Indian payer is to be deemed as the income of the recipient and it is only out such income of the recipient, the Indian Payer is deemed to withhold the TDS at the appropriate rates and pay to the Government - what the Indian payer deposits to the Government cannot be construed as tax of the Non-resident being borne by the Indian Resident Payer, but the amount paid is only out of the deemed income of the recipient - In the result the appeal filed by the assessee is allowed
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