TMI Blog2022 (10) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... and Allscripts USA. The agreement between the parties can be specific and its length or pages does not matter. Merely on the length of the agreement, the AO cannot overlook the contents of the agreement. The payment made to the non-resident was at no point of time pointed out by the Revenue that the said is coming under the purview of TDS deduction. The amount paid to Allscripts USA is on actual cost basis without any element of markup and for the reimbursement of expenses incurred by way of using the network connectivity provided by the service provider and the amount is not chargeable to tax on any accounts. Thus, the CIT(A) has rightly deleted the addition. Decided against revenue. - I.T.A. No. 41/Ahd/2021 - - - Dated:- 12-10-2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that payment made by the assessee to its holding company was in the nature of reimbursement therefore, tax was not required to be deducted u/s 195 of the Act without appreciating the fact that the assessee did not provide the agreement made between holding company and third party vendor. 4. The Ld CIT(A) failed to appreciate that payment was made to a non-resident for providing data line charges which is FTS in nature. The Ld CIT(A) further failed to appreciate the fact that mere change in the mode of payment would not change the character of income in the hands of the assessee and the same is required to be determined on the basis of transaction per se and the mode of payment would not make any difference as far as the taxabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(Appeals) allowed the appeal of the assessee. 5. The Ld. D.R. submitted that the observation of the CIT(Appeals) that the notice under Section 201 of the Act issued beyond the period of four years is not sustainable in light of the decision of Hon ble Gujarat High Court in the case of CIT(TDS) vs. Anagram Wellington Assets Management Company Ltd., 389 ITR 654 (2016) (Guj.) without appreciating the fact that the decision of Hon ble Jurisdictional High Court pertains to the resident assessee and for the default committed under Section 194I of the Act rendering the judgment obiter dictum in the case of the assessee under consideration. The Ld. D.R. further submitted that the statute defines the period of limitation for passing of orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to deduct appropriate taxes from a person who is a non-resident. Accordingly, principles in this regard have been drawn from the decision of Hon ble Delhi High Court in the case of CIT vs. NHK Japan Broadcasting Corporation (305 ITR 137) (2008) wherein it was held that action must be initiated by the competent authority under the Act, where no limitation has been prescribed as in Section 201 of the Act within a period of four years. The show-cause notice dated 28.06.2018 received by the assessee on 05.07.2018 have been issued after five years of the said reimbursement of expenditure was made by the assessee to Allscripts USA without deduction of taxes that the appellant and Allscripts USA are group companies and the agreement for sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t between the parties can be specific and its length or pages does not matter. Merely on the length of the agreement, the AO cannot overlook the contents of the agreement. The payment made to the non-resident was at no point of time pointed out by the Revenue that the said is coming under the purview of TDS deduction. The amount paid to Allscripts USA is on actual cost basis without any element of markup and for the reimbursement of expenses incurred by way of using the network connectivity provided by the service provider and the amount is not chargeable to tax on any accounts. Thus, the CIT(A) has rightly deleted the addition. 8. In the result, the appeal of the Revenue is dismissed. This Order pronounced in Open Court on 12/10/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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