Tax deduction at source not required where foreign recipient already paid tax; remand held unnecessary and deduction allowed in full.

The Delhi High Court held that a further remand to the Assessing Officer was unnecessary where the Commissioner (Appeals) had already verified that the foreign recipient disclosed the income and paid tax on a gross basis. On that factual basis, the assessee was not required to deduct tax at source on the overseas payment, so disallowance under section 40(a)(i) of the Income-tax Act, 1961 did not survive. The Tribunal's remand was therefore unwarranted, and the deduction claimed for the relevant assessment year was to be allowed in full.

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Issues: Whether the Tribunal was justified in remanding the matter to the Assessing Officer for verification of tax payment by the foreign recipient despite a prior finding that the recipient had already paid tax, and whether the deduction of Rs. 9.10 crores had to be allowed in full to the assessee.

Analysis: The relevant facts stood verified by the Commissioner of Income Tax (Appeals), who had recorded that the foreign recipient had disclosed the income and paid tax on a gross basis. Once that factual position was clear, there was no need for a further remand to the Assessing Officer merely to re-verify the same fact. In light of the earlier binding decision referred to by the Court and the finding already recorded by the appellate authority, the assessee had no obligation to deduct tax at source on the payment made abroad, and disallowance under Section 40(a)(i) of the Income-tax Act, 1961 did not survive. The deduction claimed for the relevant assessment year was therefore required to be granted in full.

Conclusion: The remand by the Tribunal was unwarranted. The issue was answered in favour of the assessee, and the deduction of Rs. 9.10 crores was held allowable in full in the assessment year in which it was incurred.

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