2019 (7) TMI 1978 - AT - Income Tax

Tribunal orders reassessment based on fresh evidence, emphasizes correct tax deduction for non-resident professionals.

M/s. Indfrag Ltd., Versus The Assistant Commissioner of Income Tax, Circle 3 (1) (1), Bangalore.

M/s. Indfrag Ltd., Versus The Assistant Commissioner of Income Tax, Circle 3 (1) (1), Bangalore. - TMI Issues:- Assessment Year 2013-14: Whether the appellant is required to deduct tax at source under section 195 of the Act on payments made to non-resident professionals and commission agents.- Assessment Year 2014-15: Whether the appellant is required to deduct tax at source under section 195 of the Act on payments made to non-resident professionals and the correct deduction under section 35(2AB) of the Act.Assessment Year 2013-14:The appeal for this year raised concerns regarding the deduction of tax at source under section 195 of the Act on payments made to non-resident professionals and commission agents. The Commissioner of Income Tax (Appeals) noted that the nature of these payments was for FTS/FIS, which was not disputed by the appellant. The Commissioner also acknowledged that these services provided technical knowledge to the appellant in India. However, the appellant submitted additional evidence, including invoices from legal firms for legal services provided outside India. The Tribunal admitted this evidence and remanded the matter back to the Commissioner for a fresh decision. The Tribunal emphasized that the additional evidence showed the invoices were related to legal services in the USA, not technical knowledge in India, warranting a reevaluation by the Commissioner. The Tribunal allowed the appeal for statistical purposes without delving into the merits of the case.Assessment Year 2014-15:In this year's appeal, the issue of deducting tax at source under section 195 of the Act on payments to non-resident professionals was again raised. Additionally, the correct deduction under section 35(2AB) of the Act was disputed. The Commissioner had limited the deduction under section 35(2AB) to the amount mentioned in Form 3CL, which the appellant contested, seeking a higher deduction. The Tribunal did not delve into the merits of the case for this year but admitted the additional evidence submitted for Assessment Year 2013-14, which highlighted the nature of the payments for legal services outside India. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for a fresh decision by the Commissioner based on the additional evidence provided.In both cases, the Tribunal focused on the need for a reevaluation based on the additional evidence submitted by the appellant regarding the nature of the payments made to non-resident professionals and the correct application of tax deductions under the relevant sections of the Act. The Tribunal emphasized the importance of considering all relevant factors before making a decision and remanded the matters back to the Commissioner for fresh decisions.