9911796707
TMI Blog2007 (2) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee had made certain payments in foreign currency in pursuance of an agreement with ONGC and Hardy Exploration and Production (India) Inc. ("HEPPII", for short) to drill oil wells in Indian waters off the coast of India. For execution of these contracts the assessee-company had taken two drilling units which were owned by M/s. Frontier Drilling ASA. Bergen, Norway and M/s. Frontier Ice. AS. Bergen, Norway. For this, the assessee-company was required to pay charter hire for the two drilling units, rig management fees and service fees. The assessee-company had made payment in foreign currency as under : Bare boat rentals relating to the assessment year 2002-03 Rs. But TDS deducted during the year 1,64,19,256 Bare boat rentals 37,96,34,157 Rig management charges 10,79,19,369 Service charges 57,09,873 50,96,82,655 3. The Assessing Officer noticed that for all these payments the assessee has deducted tax at 4.2 per cent. on the bare boat charges only. According to the Assessing Officer since this rate was lower than the rate prescribed under the Act, therefore a query was raised that why lower TDS was deducted. It was explained that section 195(1) requires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (Appeals) observed that the provisions of section 195 of the Act were independent of the provisions of section 44BB. He further observed that as per the provisions of section 195(1) tax was required to be deducted at source at the rates in force at the time of making payments of any sum to a non-resident. In case such sum was not fully chargeable to tax then section 195(2) would come into operation and the assessee could have made an application to the Assessing Officer to determine the appropriate proportion of such sum, which was chargeable to tax and then the tax was required to be deducted under section 195(1) on such proportion. He further observed that since the assessee had not availed the benefit of lower TDS available under section 195(2) therefore the only conclusion which could be drawn by the Department was that the entire sum so payable was chargeable to tax under the Act. He also observed that the provisions of section 44BB were applicable only in the case of existing assessees and the non-resident party to whom the appellant had made payment cannot be referred to as the existing assessee. He also referred to the decision of the Supreme Court in the case of Transmis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expression "other sum chargeable under this Act", which means disallowance if any has to be restricted only to that portion of the sum which is chargeable to tax. He then referred to section 4, which is the charging section and submitted that any tax shall be charged for any assessment year as prescribed under the various Central Acts, which is generally in the form of Finance Act, in respect of total income. He then referred to section 2(45), which is the definition section and defines "total income" as amount of income referred to in section 5 computed in the manner laid down in this Act. He then took us to sub-section (2) of section 5 which deals with the total income of a person who is a non-resident and provides that such total income would include all income which is received or is deemed to be received in India or accrues or arises or is deemed to accrue or arise to such non-resident in India. He vehemently argued that all these provisions very clearly show that what can be charged to tax is only the income portion and not the total payments made to non-resident. He submitted that "sum" referred to in section 40(a)(i) can by no stretch of imagination be extended to gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utomatically. He contended that in the case before us since the provisions of section 44BB were directly applicable the assessee was confident that non-resident to whom payments were being made was covered under section 44BB and that is why the assessee did not choose to make any application under section 195(2). He submitted that application is required to be made where the assessee has any doubt that how much percentage is to be subjected to tax in respect of a particular payment. Since no doubt existed in the mind of the assessee because of application of section 44BB no application was made under section 195(2). He also invited our attention to the assessment order and pointed out that nowhere the Assessing Officer has stated why the provisions of section 44BB were not applicable to non-resident party to whom such payments were made by the assessee. He further contended that in this case the assessee had definitely deducted tax and it is not a case of no deduction and at best the Department can make a case of short deduction only. In this connection he also referred to the provisions of section 201 where the words "the whole or any part of the tax" have been inserted by the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree foreign parties on which no tax was deducted. In case of one party, the Electricity Board had made an application under section 195(2). During the proceedings under section 201, the Assessing Officer estimated the tax to be deducted on whole of the payments in respect of two foreign parties where no application was made and in case where application was made, the profit was estimated and tax to be deducted was determined. Various questions were raised before the hon'ble Andhra Pradesh High Court, but learned counsel for the assessee pointed out that ultimately the court itself reframed the questions by observing that two fundamental questions arise and the questions were reframed as under (at page 763) : "(a) Whether the provisions of section 195 of the Act are applicable to cases where the sum paid to the non-resident does not wholly represent the income ; and (b) If section 195 is applicable to such cases, whether the Income- tax Officer could enforce deduction of tax at source on the gross amount of trading receipts or only in respect of that portion of the trading receipts which may be chargeable as income under the Act." 11. Learned counsel for the assessee referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read together with the judgment of the Andhra Pradesh High Court. The Andhra Pradesh High Court has clearly held that even if no application is made under section 195(2) even then the Income- tax Officer should determine only that amount of tax deductible which pertains to proportion of income chargeable to tax. As observed by the hon'ble Andhra Pradesh High Court there may be so many reasons for the assessee not to make an application under section 195(2), particularly the reason that the assessee may be under the honest belief that no proportion of sum referred to in section 195(1) is chargeable to tax. Even then the Revenue authorities can determine the amount of tax deductible only on the proportion of such sum which is required to be taxed under the Act. He submitted that in the case before us since the provisions of section 44BB were clearly attracted and the assessee was confident that only 10 per cent. of the gross sum would be presumed to be tax under section 44BB, therefore, he accordingly deducted the tax on this proportion of 10 per cent. and thus the assessee had deducted the appropriate amount of tax and therefore no disallowance under section 40(a)(i) is attracte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by DTAA ? nature of services ? etc. All these facts are required to be examined and such facts can be examined only when the assessee submits an application under section 195(2). He read out the provisions of section 195(1) and 195(2) and submitted that as per section 195(1) the assessee is required to deduct tax at the prescribed rate when any payment is made to a non-resident. Even though the expression "or any other sum chargeable under the provisions of this Act" is used but the assumption would be whole of such sum is chargeable to tax because sub-section (2) of this section very clearly provides a remedy to the assessee when only some portion of such sum is taxable. Sub-section (2) clearly provides that whenever an assessee considers that the whole of such sum would not be income chargeable to tax he may make an application to the Assessing Officer to determine the appropriate proportion of such sum so chargeable and upon such determination tax shall be deducted under subsection (1) only on that portion of the sum which is so chargeable. He submitted that thus sub-section (2) makes it very clear and plain that authority vests with the Department only, i.e., the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee may be taxable at the higher rate and just to avoid such situation tax deduction provisions are there. He submitted that if the deduction prescribed under section 195 is not made or made at a lower rate, then the Department may not have any remedy against such assessee. Then he referred to Circular No. 528 ([1989] 176 ITR (St.) 154 ) and took us to the contents of the Circular and submitted that the Board has clearly clarified that in order to ensure effective compliance of provision in section 195 of the Act relating to tax deduction at source in respect of payments outside India, the scope of section 40(a) has been extended to cover payments in respect of royalty, fees for technical services or other sum chargeable under the Act. He also submitted that the Board has further clarified that after the amendment made by the Finance Act, 1987, even if a person making payment is himself an agent of non-resident even then tax has to be deducted, which means, even if there is an agent, non-deduction of tax at source will be in contravention of the law, which will now result in disallowance in terms of section 40(a)(i). 18. The learned Departmental representative vehemently contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry where tax is required to be deducted only on the income at the average rate whereas under section 195 tax is to be deducted at the flat rate. He also invited our attention to the observations of the court at page 695 which is as under : "The alternate remedy is for an assessee to apply to the Income-tax Officer for a certificate under section 197 that the amount presumably is not subject to deduction of tax at source or should be subject to deduction at a lower rate. This section may work well in the case of unusual or extraordinary payments. But in the case of an interest subsidy payable to thousands of employees it would be meaningless to suggest that each employee should approach the Income-tax Officer for a certificate under section 197. Some employees may be able to get it in time, some may not." 19. He forcefully argued that in this case, the court took this view because thousands of employees were involved and the court felt that it may not be practical for each of the employee to approach the income-tax authorities under section 197 for lower deduction. There is no such hardship in the case before us and therefore this decision was not applicable at all. 20. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is liable to pay interest and not the asses see, as otherwise, there will be charging of interest twice on the payment of tax in relation to the same income. Such an interpretation should normally be avoided. In this case, therefore, the Tribunal appears to be right in holding that in terms of section 215 interest could not be levied on the assessee on the tax which is deductible at source." (emphasis supplied). 21. Further the learned Departmental representative referred to the decision of the apex court in the case of Associated Cement Co. Ltd. v. CIT [1993] 201 ITR 435, where it was clearly held that the person responsible for payment has to deduct tax from the entire sum paid or credited and not merely income component of the same. He referred to the provisions of section 194C and submitted that during the relevant time that section also contained the expression "income comprised therein" and the section read as under : "194C. (1) Any person responsible for paying any sum to any resident (hereinafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any case, from every judgment, it is not the decision on every small fact which could be applied in other cases but the doctrine of precedent would remain restricted only to the ratio decided in a particular decision and in this regard he referred to pages 594 and 595 of the Transmission Corporation of A.P. Ltd. v. CIT [1999] 239 ITR 587 (SC). He submitted that clearly the ratio seems to be that if no application is made under section 195(2), the income-tax has to be deducted on the gross amount. 24. He then referred to the decision of the Delhi Bench of the Tribunal in the case of HNS India VSAT Inc. v. Deputy DIT [2005] 95 ITD 157 where in similar circumstances it was held that when no application was made under section 195(2) the assessee was under obligation to deduct tax at source and once no such tax was deducted then disallowance of such payments under section 40(a)(i) were justified. He submitted that similar view was taken by the Mumbai Bench of the Tribunal in the case of Satellite Television Asian Region Ltd. v. Deputy CIT [2006] 99 ITD 91. He submitted that in this decision, it was clearly held that for invoking the provisions of section 40(a)(i), it was not necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no need to refer to the decision of Associated Cement Co. Ltd. v. CIT [1993] 201 ITR 435 (SC). In any case it is settled principle that when two decisions from the Supreme Court are available, then the latter decision in respect of that issue should be followed. In this regard, he relied on the decision of the Delhi High Court in the case of Bhika Ram v. UOI [1999] 238 ITR 113. Then referring to the case of HNS India VSAT Inc. v. Deputy DIT [2005] 95 ITD 157 (Delhi) he submitted that, that decision is clearly distinguishable because there are two distinguishing features, viz., (i) in that case no tax was deducted at all, and (ii) that payment was made towards technical services. In case of technical services, obviously the amount of TDS has to be on the gross payment. Similarly in the case of Satellite Television Asian Region Ltd. v. Deputy CIT [2006] 99 ITD 91 (Mum), no tax was deducted at all. He submitted that the decision of Czechoslovak Ocean Shipping International Joint Stock Company v. ITO [1971] 81 ITR 162 (Cal) is not relevant to the issue because the assessee never made any application under section 195(2). 26. Learned senior counsel for the assessee submitted that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the benefit of section 44BB has to file return and then only the income-tax authorities can pronounce whether such party is entitled to the benefit of the provisions of section 44BB or not. This issue cannot be decided by a party who is supposed to make payment to non-resident without filing any details in the form of return by such non-resident party with the tax authorities. Therefore, the learned Departmental representative is clearly right that the issue regarding application of section 44BB to the non-resident party to whom payments were made by the assessee-company cannot be examined in the case of the assessee itself. We are also unable to agree with the submission of the learned senior counsel for the assessee that there is no expression such as "existing assessee" used by the Commissioner of Income-tax (Appeals) by holding that the provisions of section 44BB were applicable only in the case of the existing assessee. In view of the legal situation which we have discussed perhaps what the learned Commissioner of Income-tax (Appeals) meant was applicability of these provisions could be examined only when somebody had filed return and was an existing assessee. Naturally ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h tax has been paid." 28. A plain reading of the above provision would clearly show that no deduction shall be allowed in terms of sections 28 to 38 for any expenditure payment for which has been made to a non-resident, on which tax has not been deducted in accordance with the provisions of Chapter XVII-B. A careful reading of the provision would show that it is starting with non- obstante clause, which means, it would prevail over sections 30 to 38, which are basically sections dealing with deductions to be given for computing the business profits under various sections. This in turn in plain words means, if some expenditure has been incurred for the purpose of business, where payment for the same has been made to a non-resident and tax to be deducted in accordance with the provisions of Chapter XVII-B has not been deducted then such deduction cannot be allowed even if expenditure was incurred for the purpose of business. Because of the wordings "in accordance with the provisions of Chapter XVII-B" the argument of learned senior counsel for the assessee that those provisions will not be applicable if it is a case of only short deduction in view of the decision of P. V. Rajagopal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended by the learned Departmental representative, Chapter XVII-B deals with collection of taxes and Part B of this Chapter specifically deals with the provisions of tax to be deducted at source. Section 195 reads as under : "195. (1) Any person responsible for paying to a non-resident not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head 'Salaries', shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, which ever is earlier, deduct income-tax thereon at the rates in force : . . . (2) Where the person responsible for paying any such sum charge able under this Act (other than salary) to a non-resident\q considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Assessing Officer to determine by general or special order, the appropriate pro portion of such sum, so chargeable, and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not himself decide what is the appropriate proportion which is chargeable to tax. The expression "by general or special order" and the "appropriate proportion" in this sub-section are key words to understand the meaning in the sense that there may be situations where only one particular portion of such sum is taxable in case of similar assessees and the income-tax authorities may make a general order that in such type of assessees that a particular proportion of the sum has to be considered as income chargeable to tax and tax can be deducted accordingly. It seems the Central Board of Direct Taxes has already issued a circular in respect of advertisement income earned by non-resident TV channels etc., where a proportion of income has been fixed to be considered as income. Both the parties had mentioned about this Circular in a cursory fashion and the same was not produced before us, so we are not going in detail. But suffice it to say that there can be situations which can be generalized and the proportion of the sum can be determined on general basis. In all other situations where "appropriate proportion" is required to be determined the assessee has to go before the taxing authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mainly relied on that ultimately the hon'ble High Court has replied question No. 2 as under (page 772 of 152 ITR) : "(2) The obligation of the respondent-assessee to deduct tax under section 195 is limited only to the appropriate proportion of the income chargeable under the Act forming part of the gross sums of money paid to the three non-residents above referred." 34. He submitted, this means even if no application is made under section 195(2) even then the Income-tax Officer is required to compute the tax to be deducted only on the appropriate portion which was chargeable under the Act. 35. We have read the whole judgment of the hon'ble Andhra Pradesh High Court as well as the judgment of the hon'ble apex court very carefully. For understanding this aspect we need to know certain facts. In this case, the Andhra Pradesh Electricity Board (for short "Electricity Board") made certain payments to non-residents against purchase of machinery and equipment and also against the work executed by the non-residents in India of erecting and commissioning the machinery and equipment. The Electricity Board made the payments to various parties without deducting tax at source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were arrived at in respect of other payments. E.g., in case of R.C. No. 205 of 1978 the Electricity Board had entered into an agreement with Oerliken Engineering Co. In this case against the payment made amounting to Rs. 17,00,784, the tax deductible was arrived at Rs. 72,01,554 and interest under section 201(1A) at Rs.58,55,747 totalling to Rs. 1,30,57,301. 36. We think that the importance of question No. 2 framed by the hon'ble Andhra Pradesh High Court should be judged in the background of the above noted facts as well as it should be kept in mind that the above decision was rendered in respect of section 201, which means, the court was asked upon to determine whether the assessee was required to deduct tax and if yes on what amount and what should be the appropriate rate of interest. Keeping these things in view, the hon'ble High Court very clearly observed as under (page 763 of 152 ITR) : "Two fundamental questions arise for consideration and they are : (a) whether the provisions of section 195 of the Act are applicable to cases where the sum paid to the non-resident does not wholly represent income ; and (b) if section 195 is applicable to such cases whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent wholly income or profits. As we have already pointed out, the scheme of tax deduction at source applies not only to amounts paid which wholly bear 'income' character, but also to gross sums the whole of which is not income or profits to the recipient, such as payments to contractors and sub-contractors under section 194C and the payment of insurance commission under section 194D. That being so, it is not possible to accept the contention of learned counsel for the Electricity Board that there is no sanction to deduct tax at source from sums which do not represent wholly income or profits. Indeed the scheme of tax deduction at source makes distinct provisions for deduction of tax from sums which represent wholly income or profit, or other sums, which may not so represent. In our opinion, the provisions of section 195(2) make the intendment of the Legislature very clear that what was required to be considered for the purposes of tax deduction at source under section 195(1) is not wholly income or profit. We are not impressed with the argument that section 195 expressly refers to 'any other sum charge able under the provisions of the Act' and consequently, the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also be borne in mind that whatever tax is deducted at source under section 195 from out of the gross sum is not irretrievably lost to the recipient. It is only a provisional payment which will be made to the Central Government to the credit of the recipient. The provisions of the Act enable the recipient, whether such recipient is a resident or non resident, to file a return of income in the regular course and prove to the satisfaction of the Income-tax Officer the income chargeable under the Act. After such determination if the tax provisionally deducted at source under any of the provisions contained in Part B of Chapter XVII is in excess of what is required to be paid, the Income- tax Officer is bound to grant refund of the excess tax deducted at source with interest to the recipient. Thus the interests of the recipient are fully protected under the scheme of the Act. We do not see any ground for the person responsible for making the payment to object to the deduction of tax at source provisionally either from sums which represent wholly income or from sums which represent only a part of the income chargeable under the provisions of the Act, so long as the recipient is clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce or by advance payment, as the case may be, in accordance with the provisions of the Chapter. Hence, before a regular assessment is made, tax on income shall be payable by deduction or collection at source or by advance payment in accordance with the other provisions. Section 191 provides for direct payment of income-tax by the assessee where provision is not made under the Chapter for deducting income-tax at the time of payment. Thereafter, Part B of the said Chapter contains a group of sections which provides for 'deduction of tax' at source. Section 192 provides for deduction of income-tax on the income chargeable under the head 'Salaries' by any person responsible for paying such salaries. Section 193 provides for deduction of income-tax by the person responsible for paying any income by way of 'interest on securities'. Similarly section 194 provides for deduction of income-tax by the company paying 'dividends'. Section 194A, section 194B, section 194BB provide for deduction of income-tax on the income of interest other than interest on securities, winnings from lotteries or crossword puzzles and winning from horse races, respectively. Even wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the sub-section. (d) Further, section 197 provides that the recipient can file an application to the Assessing Officer for a certificate that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax and the Assessing Officer, if satisfied can grant such certificate as may be appropriate. The scheme of sub-sections (1), (2) and (3) of section 195 and section 197 leaves no doubt that the expression 'any other sum charge able under the provisions of this Act, would mean 'sum' on which income-tax is leviable. In other words, the said sum is chargeable to tax and could be assessed to tax under the Act. The consideration would be-whether payment of the sum to the non-resident is chargeable to tax under the provisions of the Act or not ? That sum may be income or income hidden or otherwise embedded therein. If so, tax is required to be deducted on the said sum, what would be the income is to be computed on the basis of various provisions of the Act including provisions for computation of the business income, if the payment is a trade receipt. However, what is to be deducted is income-tax payable thereon at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination by the Assessing Officer that such sum would not be chargeable to tax in the case of the recipient, or for determination of the appropriate proportion of such sum so chargeable, or for grant of certificate authorising the recipient to receive the amount without deduction of tax, or deduction of income-tax at any lower rates or no deduction. On such determination, tax at the appropriate rate could be deducted at the source. If no such application is filed, income-tax on such sum is to be deducted and it is the statutory obligation of the person responsible for paying such 'sum' to deduct tax thereon before making payment. He has to discharge the obligation of tax deduction at source." (emphasis supplied). 39. The hon'ble court clearly observed that the provision of section 195(1) is for "tentative deduction", which means, the initial assumption should be that the tax has to be deducted on the whole of the amount because same is subject to regular assessment and it was specifically pointed out that the rights of the parties were not in any manner adversely affected, because wherever the assessee had any doubt that tax is to be deducted on the lower proport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that there is no force in this submission. This is mainly so, as pointed out by us in the above noted paragraphs that the court was concerned with the determination of amount of tax deductible and interest thereon under section 201 and it was also seen that the Assessing Officer had worked out fantastic figures of such tax and therefore, the court had partly upheld the contention of the Department that the assessee was under obligation to deduct tax at source under section 195 in respect of sums paid to non-residents. Therefore, it becomes clear that since the Assessing Officer had worked out apparently unreasonable sums on such tax to be deducted, the court had sent the matter back to the file of the Assessing Officer for determination of correct tax and that is why the answers of the Andhra Pradesh High Court became more relevant which are given in the last paragraph of the judgment and are as under (page 772 of 152 ITR) : "(1) The respondent-assessee who made the payments to the three non-residents above referred was under an obligation to deduct tax at source under section 195 of the Act in respect of the sums paid to them under the contracts entered into. (2) The obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue was whether the provisions of section 195 of the Act are applicable to cases where some paid to non-resident does not wholly represent income. The hon'ble Andhra Pradesh High Court as well as the hon'ble Supreme Court has very clearly observed that if is held that tax is to be deducted only on the proportion of income comprised in the gross payment made to non-resident in the absence of section 195(2), then the provisions of section 195(2) would be otiose and, therefore, it may not be correct to interpret the provision in this fashion. Then, the Supreme Court again very clearly observed that it is a tentative deduction which clearly indicates that deduction has to be made on the whole payment and if the assessee is of the opinion that whole of such gross amount does not constitute income of the recipient then he could always come to the Department by way of application under section 195(2). That is why the hon'ble Supreme Court clearly observed at page 595, "the rights of payee or recipient are fully safeguarded under sections 195(2), 195(3) and 197. The only thing which is required to be done by them is to file application for determination by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and- . . . shall, at the time of credit of such sum to the account of the con tractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier deduct an amount equal to two per cent of such sum as income tax on income comprised therein." (emphasis supplied) 46. A reading of the above provision would show that the expression "such sum as income-tax, on the income comprised therein" was also present in section 194C. On the basis of this expression the hon'ble apex court observed at page 441 as under : "The above decision cannot be of any help to the appellant for it does not lay down that the percentage amount deductible under section 194C(1) should be out of the income of the contractor from the sum or sums credited to the account of or paid to him. The words in the sub-section 'on income comprised therein' appearing immediately after the words 'deduct an amount equal to two per cent of such sum as income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C). 48. We also find that the issue is covered squarely against the assessee by the decision of the Tribunal in the case of HNS India VSAT Inc. v. Deputy CIT [2005] 95 ITD 157 (Delhi) where it was held that when the assessee had not deducted tax from the payments made to non-residents against various jobs relating to installation and no application under section 195(2) was made then the assessee was under obligation to deduct tax at source and having failed to make any such deduction the Assessing Officer was fully justified in disallowing payments by invoking the provisions of section 40(a)(i). We think, it is immaterial whether some tax has been deducted or not and in any case, whatever tax has been deducted by the assessee corresponding credit has already been allowed by the lower authorities. Similar view was taken by the Mumbai Bench of the Tribunal in the case of Satellite Television Asian Region Ltd. v. Deputy CIT [2006] 99 ITD 91 (Mum). 49. In view of the detailed discussion and reasons given by us in the above noted paragraphs, we find no merit in the appeal filed by the assessee. In any case, no harm is going to be caused to the assessee due to this disallowance because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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