Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 939 - AT - Income TaxDisallowance of the claim - Failure to deduct TDS – Provision made to make the payment to non-resident – Held that:- Section 195 put an obligation for deducting TDS while making payment to non-resident - It nowhere provides that such an obligation can be absolved by showing reasonable cause for not deducting the TDS while making payment or crediting the account - Relying upon Nathpa Jhakri Joint Venture Vs. ACIT [009 (12) TMI 677 - ITAT MUMBAI] - if amount paid or payable to non-resident is chargeable to tax in his hand and assessee fail to deduct tax at source then said amount shall not be allowed as deduction u/s 40 (a) (i) – assessee contended that there is no mala fide in the conduct of the assessee, it has just reimbursed the expenses to the parent company - It has not made this arrangement for avoiding payment of taxes - The element of income is embedded in the receipt of the auditor - If the receipts are routed through the parent company that does not extinguish the element of income from the payments – thus, the assessee was bound to deduct TDS - It failed to deduct TDS, hence a disallowance is to be made u/s 40 (a) (i) – the AO is directed to exclude the amount from the disallowance after verification – Decided partly in favour of Assessee.
|