TMI Blog2021 (7) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... ld, were made. The taxdeductor cannot be expected to have clairvoyance of knowing how the law will change in future. A retrospective amendment in law does change the tax liability in respect of an income, with retrospective effect, but it cannot change the tax withholding liability, with retrospective effect. The tax withholding obligations from payments to non-residents, as set out in Section 195, require that the person making the payment at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income -tax thereon at the rates in force . When these obligations are to be discharged at the point of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3. On the facts and circumstances of the case and in law the Ld.CIT Appeal has erred in not appreciating that retrospective amendment in law cannot charge the tax withholding liability with retrospective effect unless such services were rendered in India. 2. The facts giving rise to the present case of the assessee are that the case of the assessee was re-opened for assessment and the assessment was framed u/s 147 of the Income Tax Act, 1961 ( the Act ) vide order dated 26.03.2014. While framing the assessment, the Assessing Officer did not accept the explanation offered by the assessee regarding non-applicability of provision for deduction of tax, therefore, he proceeded to make addition of ₹ 57,38,948/- on account of non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on the decision of the Tribunal rendered in the case of M/s. Virola International vide ITA No.256/Agr/2013 for Assessment Year 2008-09. He further placed reliance on the judgement of High Court of Karnataka rendered in the case of M/s. Jindal Thermal Power Company ltd. vide ITA No.3022/2005 to 3025/2005. 6. On the contrary, Ld. DR opposed these submissions and supported the order of authorities below. 7. We have heard the rival contentions and perused the material available on record. We find that Ld.CIT(A) has decided the issue in question by observing as under:- {4.3.1}. I have considered the appellant's submission and the assessment order. Following facts have emerged; 1. That the appellant company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices rendered which entails the payment on account of Global Account Co-ordination Cost. I have also taken into account the rationale of Hon'ble ITAT judgment in the appellant's own case on similar issue for A. Y:2007-08. I have also considered the fact that the services rendered by the parent company does come under the purview of technical services if we look at the multilateral agreement. The relevant part about the scope the arrangements as per agreement is reproduced in the earlier para. Therefore, the payment comes under the purview of section 195 of the Act particularly after insertion of the following provision which is applicable from the retrospective date 01/04/1976. The Finance Act 2010 has inserted an explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and transfer of a technical plan or technical design. Therefore, taking into account factual matrix of the case, it is my considered view that the A.O is justified in disallowing the payment as it had attracted provision of section 195 of the Act which the appellant company had failed to deduct tax at source. Accordingly, the disallowance of ₹ 57,38,948/- on account of Global Account Coordination Cost under section 4O(a)(i) of the Act is upheld. Appellant's ground of appeal is dismissed. 8. From the above, we find that the Ld.CIT(A) has relied upon the amendment in the statute. However, the Co-ordinate Bench of this Tribunal after having considered the amendment held in the case of Ashapura Minichem Ltd. vs ADIT 131 T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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