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2012 (6) TMI 404 - AT - Income TaxDisallowance under Section 40(a)(i) of Income-tax Act for non deduction of tax on consultancy charges paid to nonresidents working in oil exploration projects in India – Held that:- payments made by the assessee to non-resident consultants, were directly related to the Nigerian projects of the assessee. Assessee being engaged in consultancy business, the fees paid to such consultants on its projects abroad has to be considered as fees paid for services utilized in the business of the assessee outside India. - Therefore, clearly Section 9(1)(vii)(b) of the Act applied and the income earned by such non-residents cannot be deemed to accrue or arising in India. Therefore, assessee had every reason to hold a bona fide belief that no part of the payment had any element of income which was chargeable to tax in India. It cannot be fastened with any liability associated with non-deduction of tax at source on such payments. application of Section 40(a)(i) of the Act was not called for. appeal filed by the Revenue is dismissed
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