TMI Blog2016 (3) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 65,49,217/-, the assessee had not deducted TDS on the payment aggregating to ₹ 33,93,493/- ( on the balance amount TDS has been deducted), on the ground that, such payment relate to services rendered outside India. The revenue’s case is that, in view of the Explanation brought in the statute by the Finance Act, 2010 which got the President’s assent in May, 2010 has been brought in the statute with retrospective effect form 1st June, 1976 and such an Explanation is clarificatory in nature which now provides that, the income of a non-resident shall be deemed to accrue in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) of section 9 and shall be included to the total income of the non-resident, whether or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only great hardship and injustice but also prejudice to the assessee. Accordingly, we hold that, disallowance under section 40(a)(i) on account of any retrospective amendment is wholly vitiated and cannot be sustained. - Decided in favour of assessee - ITA No. : 2357/Mum/2014 - - - Dated:- 2-2-2016 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Appellant : Shri Kirit Kamdar For The Respondent : Shri Sachhidanand Dubey ORDER PER AMIT SHUKLA, J. M.: The aforesaid appeal has been filed by the assessee against impugned order dated 03.02.2014, passed by CIT(A)-27, Mumbai for the quantum of assessment passed under section 143(3) for the assessment year 2010-11, on following grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rammes organized by HGSL during the year. Tax was deducted wherever it was applicable and has been deposited by the assessee. The details of break-up and nature of payment made to Switzerland company as pointed by the AO has been elaborated at Para 5.1. However, he noted that, the assessee has not deducted TDS in respect of following payments which were on account of training conducted by the Switzerland company outside India: Sr. No. Particulars Amount (Rs.) 1 Being payment towards HARP training fees 1,42,848 2 Being payment towards training for management fees 11,24,928 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces have been utilized in India. In the case of the assessee, the services have been rendered by HGSL outside India and therefore, in view of the principles laid down by the Hon ble Supreme Court assessee had not deducted TDS. Besides this, it was also submitted that, explanation brought by the Finance Act, 2010 with retrospective effect from 1st June, 1976 cannot be held to be applicable at the time of making the payment. However, the Ld. AO rejected the assessee s contention and after detailed discussion held that, the payment was taxable as fees for technical services within section 9(1)(vii) and assessee should have deducted TDS. The decision of Hon ble Supreme Court will not be applicable or is no longer valid in view of explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date. In support of his contention, he strongly relied upon a decision of ITAT Bench in the case of Channel Guide India Ltd. vs ACIT [2013] 49 and has also filed compilation of various other Tribunal decisions, wherein, it has been held that assessee cannot be held to be liable to deduct TDS when the amendment has been brought subsequently with retrospective effect. 4. On the other hand, Ld. DR strongly relied upon the order of the CIT(A) and submitted that the retrospective amendment means that, law was always like that and strict compliance has to be made. 5. We have heard the rival contentions and also perused the relevant findings given in the impugned order. It is an undisputed fact that the assessee has made payment to HGSL wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are not utilized in India then there is no liability for deducting TDS. The amendment has been brought specifically to negate the decision of Hon ble Supreme Court. An assessee who has to make the payment cannot visualize or apprehend that in future a retrospective amendment would be brought whereby it would require withholding of tax. Even if the purported amendment has been brought with the intention to clarify the provision but there was no such judicial interpretation that payments made to non-residents for rendering of services in India is taxable in India in absence of any business connection in India or PE in India and in the absence of any clear-cut law, assessee cannot be held to be liable to deduct TDS. It is a trite legal maxim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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