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TMI Blog2024 (11) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in section 80IA[5] would mean only the first year of the claim of deduction u/s. 80IA by the assessee and not the commencement of operation of the eligible undertaking? 2. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that the unabsorbed depreciation and carried forward losses of the earlier years which had already been set off against the other income, could not be notionally carried forward and taken into consideration for the purpose of computation of deduction u/s. 80IA, in spite of the clear provisions of section 80IA stipulating that the said undertaking should be considered as only the source of income of the assessee for the purpose of determining the el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their services was overseas and the remittances had been made through the Reserve Bank of India directly to the agents abroad. Hence, it was the case of the assessee that the payments had neither accrued nor arisen in India and the Act, in relation to deduction of tax at source, would not apply in such circumstances. 5. The assessee had also relied on Circular No.786 dated 07.02.2000 ('Circular') to the effect that there was nil taxability on export commission paid to non-resident agents rendering services abroad. Incidentally, Circular No. 786 has been withdrawn by Circular No. 7/2009 dated 22.10.2009. 6. The assessing authority proceeded to complete the assessment effecting a disallowance under Section 40(a)(i) of the Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assessing Officer in computing the profits and gains of business or profession, in a case in Mumbai charge, had wrongly allowed a deduction in respect of a payment to a non-resident where tax had not been deducted at source. The nature of the payment in this case was export commission and charges payable for services rendered outside India. In the view of C & AG the expenditure should have been disallowed in accordance with the provisions of section 40(a)(i) of the I.T. Act, 1961. It has come to the notice of the Board that a similar view, on he same set of facts has been taken by some Assessing Officers in other charges. 2. The deduction of tax at source under section 195 would arise if the payment of commission to the non-resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 40(a)(i) of the Act as in the instant case. 10. Per contra, the assessee has relied upon the judgment of the Supreme Court in GE India Technology Centre (P) Ltd V. Commissioner of Income Tax and Another (327 ITR 0456). In that case, the Supreme Court has settled the proposition that there is no obligation to deduct tax in respect of remittances made to non-residents in the event that the payer/deductor was of the view that the amount was not liable to tax. 11. Needless to state, such liberty would arise only in the absence of an adjudication/determination of the liability to tax qua that remittance by the authority concerned. Moreover, if the assessee ventures to unilaterally decide on the tax liability/or the quantum thereof, in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had the benefit of the adjudication by the Income Tax Office (TDS), who had concluded that the remittance was of an amount that constituted royalty. According to him, it is only in those circumstances that the Court had come to the conclusion that there was no liability to deduct tax at source. In the present case, the authorities did not have the benefit of such adjudication. Hence, and in such circumstances, he would yet again turn to the ratio laid down in Transmission Corporation of A.P. Ltd. 14. In our considered view, the ratio in the case of Transmission Corporation of A.P. Ltd is different. In that case, the Court was concerned with the taxability or otherwise of a composite payment made to a foreign entity. It was in those circums ..... X X X X Extracts X X X X X X X X Extracts X X X X
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