TMI Blog2018 (9) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... On the question of TDS, the learned Senior Counsel also has a case that even before the present amendment bringing in the proviso to Section 201(1), there was a circular issued by the Central Board of Direct Taxes, which was referred in Hindustan Coca Cola Beverage P. Ltd. v. Commissioner of Income Tax [2007 (8) TMI 12 - SUPREME COURT OF INDIA]. With respect to the payments of uplink charges and backhaul link usage charges, the Tribunal shall examine an expert as produced by the assessee and the Department shall be permitted to cross examine the expert as also produce any further evidence or witnesses on their behalf. The issue shall be decided on the basis of the decision in Bharati Cellular Ltd. [2010 (8) TMI 332 - SUPREME COURT OF IND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not applicable squarely to the facts of the present case? 2. ITA Nos.100, 104, 105, 106 and 107 of 2011 arise from the orders passed under sub-Sections (1) and (1A) of Section 201 of the Income Tax Act, 1961 ( Act for short). ITA Nos.108, 109, 110, 111 and 112 of 2011 arise from the orders of penalty passed under Section 271C of the Act. The allegation against the assessee was with respect to there being no deduction of tax at source on the various transactions entered into by the assessee in the said years as also delay in payment of Tax Deducted at Source (TDS) in certain instances. The transactions on which the allegations were raised were five in number: (1) Tax deductions to be made from the payment against contracts, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such directions as issued by the Honourable Supreme Court. The Tribunal ought to have first examined whether the facts and law apply and only then could have directed the AO to make an enquiry. It is pointed out that Eli Lilly (supra) arises in a totally different context where there was a dispute as to whether the home salary received by foreigners in their home State in foreign currency was assessable to tax within India as income arising in India. There was a bona fide dispute raised for the first time on which dispute the Honourable Supreme Court answered finally by the above decision and in that context directed an enquiry into the payment of tax by the employee itself. This cannot have any application to the facts of the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he test to be applied is whether the payments of home salary paid abroad by the foreign Company to the expatriates had any connection or nexus with his rendition of service in India. On facts, it was found that expatriates were working within India for the Indian Company in the said period and were not at all discharging any duties for the foreign Company. On reading Sections 9(1)(ii) and 5(2)(b) it was held that income which falls under the head salaries, if it is deemed to accrue or arise in India, the same would be taxable even if it is paid to the expatriates at their home country in foreign currency. The Honourable Supreme Court had also noticed that therein the recipient of salary was clearly identifiable and in such circumstances, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also rendered on the peculiar facts arising therein, which was stated so:- The concept of aggregation or consolidation of the entire income chargeable under the head Salaries being exigible to deduction of tax at source under section 192 was a nascent issue. It has not been considered by this court before. Further, in most of these cases, the tax deductor-assessee has not claimed deduction under section 40(a)(iii) in computation of its business income. This is one more reason for not imposing penalty under section 271C because by not claiming deduction under section 40(a)(iii), in some cases, higher corporate tax has been paid to the extent of ₹ 906.52 lakhs. (sic-para 36) The said principle on which the penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) [Hindustan Coca Cola Beverage P. Ltd. v. Commissioner of Income Tax]. The relevant paragraph is quoted hereunder:- Be that as it may, Circular No.275/201/95-IT(B) dated January 29, 1997, issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares no demand visualized under section 201(1) of the Income-tax Act should be enforced after the tax deductor has satisfied the officerin- charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201(IA) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under Section 271C of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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