TMI Blog2003 (8) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant to deduct tax at source at 3096 on the payment of fee for technical services by rejecting application for deduction of tax at lower rate. The appellant deducted the tax @30% on the remittances made in accordance with section 115A of the I.T. Act to the non-resident. The appellant also issued a TDS certificate for Rs. 1,73,73,842 to M/s.Corningequivalent to 30% of tax payment. The assessee's appeal for lower deduction of tax at source was later allowed by the Ld. CIT(A) and confirmed by the Tribunal in ITA No. 2335/Del./97 dated 5th February, 2002 for assessment year 1995-96 by holding that there is no permanent establishment of Corning in India and there is no question of taxing the income of Corning in India on a higher rate. 2.1 The Assessing Officer, however, vide order dated 18-2-1999 declined to refund the difference between 20% deductible and 30% of tax deducted at source to the appellant for two reasons: (a) Relief/right, if any, arising from the appellate order does not accrue or arise to the deductor M/s. Samcor Glass Ltd. (b) Relief of excess deduction can be claimed by the payee on production of appropriate evidence of not having availed itself of cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the rates applicable, the excess shall be refunded to the assessee, since its retention may offend article 265 of the Constitution. Accordingly it was contended that excess tax at source has to be returned to the appellant and authorities below have erred in denying this claim. 4. On the other hand, the learned D.R. contends that article 25 of the Treaty is also to be read with article 12 which speaks of royalties and fees for included services. From the nature of payment it is evident, as is borne out from authorization issued by the Assessing Officer for making remittances to the non-resident, the payment could be taxed in US. Reference was also made to article 12(2) of the Treaty which also states that such royalties and fees for included services may also be taxed in theContractingStatein which they arise and as such it was contended that the appellant is not immuned from taxation thereof inIndia. 4.1 The learned D.R. further contends that the assessee had issued TDS certificate, copy placed at page 23 of its paper book. This certificate is in Form No. 16A and issued under section 203 of the Income-tax Act, 1961. The assessee has not cancelled the said certificate nor it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TDS certificate once issued is like cash in the hands of the payee. It is not the assessee's case that TDS certificate was not issued at the rate of 30% nor that the payee had not availed benefit thereof or did not use the certificate inIndiaor in his own country i.e.,USA. The assessee's plea that the payment had been made net of tax will not alter the situation under the circumstance when the assessee has duly issued TDS certificate to the payee and the payer also does not deny this fact. In this view of the matter it was contended that there is no force in the pleas made by the assessee. In the event, the request of the assessee is accepted, it will deprive the state of its legitimate share of tax collected by it. 5. We have heard the parties with reference to material on record and the precedents relied upon by them. M/s.Corning, a non-resident belongs toUSA, a country with whichIndiahas signed a Double Taxation Avoidance Agreement (DTAA) on20th December, 1990. The nature of payment made to the Non-resident is technical fee for supervisory services rendered for making glass etc. According to article 12 of the DTAA signed by India with the US, the royalties and fees paid f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is aContractingStatein which the income for included services has accrued to it. It will, therefore, be wrong to say that such income is not assessable under the Act and payee is precluded from claiming credit on the basis of certificate issued under section 203 of the Act. Even under article 25 of the Treaty, the State of United States is obliged to allow credit of such amount against theU.S.tax. 5.5 The appellant also asked for refund of excess deduction on the strength of Circular No. 769 issued by Central Board of Direct Taxes on6-8-1998. In para 1(i) of the said circular three circumstances are stated on the basis of which the Board vide para 3 of the Circular took a decision that a refund may be made independent of the provisions of the Income-tax Act to the person responsible for deducting the tax at source from payments to non-residents. These circumstances are:- (a) The contract is cancelled and no remittance is required to be made to the foreign collaborator; (b) The remittance is duly made to the foreign collaborator, but the contract is cancelled and the foreign collaborator returns the remitted amount to the person responsible for deducting tax at source; (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Frank Beaton's case was rendered under peculiar facts and circumstances of that case. TheHon'ble Courtdid not lay a straight jacket formula to make refund to the employer in each and every case of payment. In that case, employer had not issued a TDS certificate of tax collected from him. Returns of income were also filed inIndiaby the employee and an assurance was given before the court that the employee i.e., payer will make the payment of additional tax. All such elements are absent in the appeal before us. 5.10 The appellant-company seeks refund of that amount of TDS for which the payee is precluded for taking credit in his assessment. In case refund is allowed to be given to the company its consequences will be adverse and prejudicial to the interest of revenue, besides, depriving the revenue of its legitimate share of taxes. In the overall analysis of facts and circumstances of the case and on findings arrived at we are convinced that the appellant is not the rightful person to claim refund in the amount of TDS for which a valid certificate stands issued to the payee. The order of the learned CIT(A) therefore needs no interference. Ground raised by the assessee stands r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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