Court upholds ITAT decisions on tax withholding and turnover calculation The High Court dismissed the appeal, upholding the decisions made by the ITAT and the Bombay High Court in the respective matters. The Court found that ...
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Court upholds ITAT decisions on tax withholding and turnover calculation
The High Court dismissed the appeal, upholding the decisions made by the ITAT and the Bombay High Court in the respective matters. The Court found that the Assessee was not liable to withhold tax under section 195 of the Act on payments for management services fee and that items not part of the 'Export Turnover' cannot be considered part of the 'Total Turnover'.
Issues: 1. Whether the Assessee was liable to withhold tax under section 195 of the Act on payments made for management services fee and the disallowance under Section 40(a)(i) of the Act. 2. Whether a particular item not part of 'Export Turnover' can constitute a part of 'Total Turnover'.
Analysis:
1. The first issue raised by the Revenue was regarding the liability of the Assessee to withhold tax under section 195 of the Act on payments made for management services fee and the subsequent disallowance under Section 40(a)(i) of the Act. The High Court referred to a previous decision in Steria (India) Limited v. Commissioner of Income Tax-VI (2016) 386 ITR 390 (Del) where a similar question was addressed. The Court, based on the precedent, declined to frame the question, indicating that the matter had already been settled in a previous judgment.
2. The second issue involved whether a specific item not forming part of the 'Export Turnover' could still be considered a part of the 'Total Turnover'. The ITAT had based its decision on the Assessee's previous case for the AY 2009-10 and also cited a judgment from the Bombay High Court in The Commissioner of Income Tax-8 v. M/s. Gem Plus Jewellery India Ltd. (2011) 330 ITR 175 (Bom). After reviewing the judgments, the High Court found no reason to deviate from the stance taken by the ITAT and the Bombay High Court. The Court concurred with the view that the total turnover inherently includes the export turnover, and if an item is not part of the export turnover, it cannot be considered a part of the total turnover either.
In conclusion, the High Court dismissed the appeal, upholding the decisions made by the ITAT and the Bombay High Court in the respective matters.
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