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2015 (11) TMI 915 - ITAT CHENNAI

2015 (11) TMI 915 - ITAT CHENNAI - [2015] 42 ITR (Trib) 423 (ITAT [Chen]) - Disallowance under section 40(a)(ia) - professional charge paid to non-resident in foreign currency outside India - DTAA - Held that:- The learned authorised representative could not controvert that the aforesaid individuals had not rendered technical service to the assessee, however he pleaded that the Revenue authorities have not looked into the direct tax avoidance agreement for making the disallowance under provision .....

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s to be remitted back to the file of the learned Assessing Officer to look into the Double Taxation Avoidance Agreement in order to compute the disallowance as per the provisions of the Act. Accordingly, we remit the case to the file of the learned Assessing Officer for fresh consideration in the light of the observations made hereinabove and the prayer of the learned authorised representative. - Decided in favour of assessee for statistical purposes. - I. T. A. No. 1810 /Mds/ 2013 (assessment y .....

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he Income-tax Act, 1961. 2. The assessee has raised twelve elaborate grounds in its appeal, however the crux of the issue is that : (i) The learned Commissioner of Income-tax (Appeals) has erred in upholding the disallowance under section 40(a)(ia) of the Act towards professional charge paid to non-resident in foreign currency outside India, viz., Mr. Harry Davis (USA) ₹ 8,66,202, Mr. Anthony Battaglia (USA) ₹ 32,48,252 and Mr. Tony (Australia) ₹ 5,21,591. (ii) The learned Comm .....

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11. The return was initially processed under section 143(1) of the Act and subsequently the case was selected for scrutiny through CASS and thereafter assessment was completed on January 23, 2013. 4. During the course of assessment proceedings the learned Assessing Officer observed that the assessee had paid an aggregate amount of ₹ 47,56,025 to Mr. Harry Davis (USA) ₹ 8,66,202, Mr. Anthony Battaglia (USA) ₹ 32,48,252 and Mr. Tony (Australia) ₹ 5,21,591 for providing tech .....

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able and accordingly provisions of section 40(a)(ia) will be attracted. The relevant portion of the order is extracted hereinbelow : "6. I have gone through the submissions made by the appellant and also the order of the Assessing Officer. During the course of appellate proceedings, the CFO of the company Shri S. R. Venkatach alam appeared and filed the details of consultancy fees paid to Mr.Anthony Battaglia and Ms. Sharin Dawn Farrell. The CFO clarified that there is no written agreement .....

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d for aircraft tyre retreading. As stated by the CFO, it was regular consultation with regard to the tyre retreading of aircraft. Mr. Anthony Battaglia as per the information filed by the assessee, has come here in June and has given consultation which is in the nature of technical fees. It was stated by the company's representative that he was a specialist and a technical person in respect of aircraft tyres. There was no agreement between Mr.Anthony Battaglia and the appellant-company to as .....

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e absence of the agreement regarding consultancy fees paid to Mr. Anthony Battaglia, the provision of section 9 regarding the income deemed to accrue or arise in India are attracted. The addition made by the Assessing Officer with respect to the professional payments made to Mr. Anthony Battaglia is confirmed. (ii) Mr. Harry Davis : Regarding the consultancy fees paid to Mr.Harry Davis, a U.S. citizen, the complete details could not be furnished. The authorised representative only furnished invo .....

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for fixing the amount of value at 2000 US dollars per month also could not be explained by the appellant. The nature of services is technical in nature and come under fees for technical services rendered in India. The Assessing Officer after discussing the provisions of sections 9 and 40(a)(ia) has rightly disallowed the technical fee paid to Mr. Harry Davis. (iv) The appellant has not furnished any details with regard to payments made to Mr. Tony of Australia. In the absence of any details and .....

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