TMI Blog2010 (12) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... section 234B of the Income-tax Act in respect of assessee which is a foreign company. 2. The brief facts of the case are that the assessee is a non-resident company incorporated under the laws of USA. It is engaged in the manufacturing of semiconductor components. It has got a subsidiary in India i.e., M/s. Texas Instruments Incorporated India . During the year under consideration, the assessee has received Rs. 85,93,50,360 towards EDA charges from M/s. Texas Instruments India and the same were accrued in India under section 9(1)(vi) of the Income-tax Act and was offered for taxation as royalty. The assessee has also income from IT support services at Rs. 9,25,99,922 and as the international transaction exceeded Rs. 5 crores, the case has been referred to the Transfer Pricing Officer for determination of ALP (Arm's Length Price) The TPO vide order dated 31-10-2008 did not determine any adjustments to the ALP computed by the assessee. 3. The assessee has filed its return of income on 31-10-2005 declaring a taxable income of Rs. 95,19,50,282. During the assessment proceedings under section 143(3) the assessee was asked to furnish various details and on perusal of the same, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant), it is highly improbable that the appellant was ignorant or unaware of the withholding order under section 195(2) obtained by TIO India from the ITO, International Taxation, Ward 19(2), Bangalore. The liability for tax on income chargeable to tax in India being the primary liability of the appellant, it cannot wriggle out of the situation by merely claiming that it was not aware of the lower withholding order and that it nurtured the belief that tax was deductible at source under section 195 of the Act by its subsidiary, TI India on the various payments to be made by it to the appellant. It is well settled that orders under section 195(2) are provisional and subject to modification in the regular assessment proceedings. An order under section 195(2) does not bind the Assessing Officer in regular proceedings. One has to go by the order in the regular assessment proceedings and not by the tentative order under section 195(2) of the Act. However, since TI India is seen to have deducted TDS and paid it to Govt. account as per the withholding order under section 195(2), it cannot be held liable for payment of any interest in terms of section 201(1A) of the Act. If the plea of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he employees and equipment and maintenance charges are in the nature of royalty and 15 per cent of the same is chargeable to tax in India and following the directions of the Assessing Officer, the assessee has paid the tax on the entire demand of tax and has not filed any appeal against the same. 6. He submitted that merely because the assessee has complied with the demands of tax by the Assessing Officer, it would not mean that the assessee has the liability to pay the interest under section 234B of the Income-tax Act. He submitted that there was double taxation avoidance agreement between India and USA and as per Article 12(2) of the said agreement, fees for services included may be taxed in the contracting State in which they arise in accordance with the laws of the State. It was submitted that IT support services and cross charges charged by the assessee company to M/s. Texas Instruments Incorporated India represents certain portion of the common expenses incurred by the assessee company such as expenses on common IT infrastructure, system malfunction and repair expenses, expenses on maintenance and implementation of global information system etc., which are allotted to M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Dy. DIT (International Taxation) [2008] 113 ITD 113 (Delhi) 10. Asstt. DIT (Internationa Taxation) v. Chiron Behring GmbH Co. [2008] 24 SOT 278 (Mum.) 11. Dy. DIT (Internation Taxation) v. Set Satelite (Singapore) Pte. Ltd. [2007] 106 ITD 175 (Mum.) High Court decisions 1. CIT v. Halliburton Offshore Services Inc. [2004] 271 ITR 395/140 Taxman 405 (Uttaranchal) 2. CIT v. Tide Water Marine Intl. Inc. [2009] 309 ITR 85/177 Taxman 150 (Uttarakhand) 3. DIT (International Taxation) v. NGC Network Asia LLC [2009] 313 ITR 187 (Mum.) 8. The learned DR on the other side supported the orders of the authorities below and submitted that the CIT(A) has considered all the judicial precedents relied upon by the assessee. In support of her contention, that the advance tax is payable by the assessee and that interest under section 234B is also leviable, she submitted that the under section 195(2) of the Income-tax Act the certificate issued by the Assessing Officer is a provisional certificate and hence, it cannot be relied upon by the assessee for taking an argument that he is not liable to pay advance tax. According to her provisional certificate issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly relied upon the decision of the Tribunal in the case of Ansaldo Energia SpA v. Asstt. DIT (International Taxation) [2008] 115 TTJ (Chennai) 942 for coming to the conclusion that the interest under section 234B is leviable. She placed a copy of the said decision before us. 11. Having heard both the parties and having considered the rival contentions, we find that the basic question before us is as follows; 12. Once the payer has obtained a certificate under section 192(2) of the IT Act regarding taxability of the payments and where the entire amount of payments made to non-resident are covered by the provisions of TDS, the interest under section 234B can be levied on a non-resident company. 13. The CIT(A) and the learned DR have relied upon the decision of the Tribunal in the case of Ansaldo Energia SpA (supra) while the learned counsel for the assessee has relied upon a catena of decisions including that of the Special Bench of the Tribunal in the case of Motorola Inc. (supra) and also decisions of the Hon'ble High Courts of Uttaranchal and Uttarakhand and Bombay. 14. In the case of Ansaldo Energia SpA (supra), the co-ordinate Bench of this Tribunal after considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter. Sub-section (1) thereof deals with four situations under which the advance tax payable by the assessee is to be computed. Admittedly, these cases do not concern with clauses (a) to (c). Clause (d) of sub-section (1) of section 209, which is relevant reads as under; "(d) The income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may, be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable." 8. This clause categorically uses the expression 'deductible or collectable at source' and it is this clause which is incorporated by the Uttaranchal High Court in the said judgment (supra) in the manner already pointed above. The scheme of the Act in respect of non- residents is clear. Section 195 of the Act puts an obligation on the payer, i.e., any person responsible for paying to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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