TMI Blog2005 (1) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... l raised by the assessee in all the appeals are common except the difference in amount and in the name and address of the recipient foreign parties; and hence, only grounds of appeal in ITA No. 2574/Mum./2000 are reproduced below : ( i )Learned CIT(A) erred in law by upholding the order passed, by the Assessing Officer in violation of the fundamental principles of natural justice insofar as the Assessing Officer did not give the appellant the opportunity of either submitting a reply to the Show cause notice issued by him or of a personal hearing before passing his order. ( ii )Learned CIT(A) erred in observing that the appellant did not agitate the issue as to whether the matter should be dealt with under section 195 or 201, though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th a limit of Rs. 300 plus tax per meal per person and laundry, local transportation between hotel and work place with driver on all working days. There is no dispute regarding payment of principal amount, which is based on hourly rate on men hours and tax is deductible therefrom. But the dispute is regarding the expenses incurred by the assessee on account of airfare, lodging and boarding and local travelling etc. from which, no tax was deducted by the assessee-company on the basis of certificate from Chartered Accountant. In their opinion, consideration for the services as invoiced and passed for payment can alone be regarded as liable to tax and as such, the expenditure incurred by the assessee-company on account of air ticket, hotel e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and not paid to the foreign parties, section 195(1) is not applicable to these expenses. It was also contended that foreign parties does not derive any benefit out of these expenses incurred by the assessee; and hence, in view of section 4(2) also, no tax is deductible from this amount. It was submitted that as per section 4(2), tax has to be deducted at source in respect of income chargeable under section 4(1) and since, these expenses are not resulting any income to the foreign parties, no TDS is to be deducted from these expenses incurred by the assessee. It was also contended that these foreign parties are dealing in providing technical information and services of technical personnel; and hence, it is their business income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regarding the judgment of Hon ble Apex Court rendered in the case of Transmission Corpn. of A.P. Ltd. v. CIT [1999] 239 ITR 587 it was held by the Hon ble Apex Court that purpose of sub-section (1) of section 195 is to see that the sum which is chargeable under section 4 of the Act for levy and collection of income-tax, the payer should deduct the income-tax thereon at the rate in force, if the amount is to be paid to the non-residents. Person making payment may file application before the Assessing Officer for determination of sum chargeable to tax and on such application, Assessing Officer may determine the income portion of the payment on which, the tax is to be deducted; but no such application is filed, payer has to deduct tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion as to whether TDS has to be deducted under section 195 from the cost of expenses incurred by the assessee on providing basics to the foreign technicians in the form of air travel, boarding and lodging etc.; and hence, this judgment is squarely applicable in the present case. Reliance was also placed on the Tribunal order in the case of IAC v. Tata Iron Steel Co. Ltd. [IT Appeal Nos. 6277 to 6287 (Bom.) of 1987 and 737 (Bom.) of 1988 dated 16-11-1995], wherein it was held that airfare from USA to India and back and all expenses in India, boarding and lodging at the guest house maintained by the assessee, medical facility etc. is nothing but the expenses incurred by the assessee-company on providing the basics on which there cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the present case. We also find that the judgment of Hon ble Jurisdictional High Court rendered in the case of Tata Engg. Locomotive Co. Ltd. ( supra ) and the Tribunal order in the case of Tata Iron Steel Co. Ltd. ( supra ) are squarely applicable in the present case because in both these judgments, it was held that from expenses incurred by the assessee for providing basics to the foreign technicians, no benefit is derived by the technicians; and therefore, no part of it could be treated as payment in lieu of fees; and therefore, question of deduction of tax at source on which expenses incurred does not arise. But, we find that no evidence is furnished in support of this contention that the expenses were directly incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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