TaxTMI 
TaxTMI 
2010 (12) TMI 916
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....xas Instruments India and the same were accrued in India under section 9(1)(vi) of the Income-tax Act and was offered for taxation as royalty. The assessee has also income from IT support services at Rs. 9,25,99,922 and as the international transaction exceeded Rs. 5 crores, the case has been referred to the Transfer Pricing Officer for determination of ALP (Arm's Length Price) The TPO vide order dated 31-10-2008 did not determine any adjustments to the ALP computed by the assessee. 3. The assessee has filed its return of income on 31-10-2005 declaring a taxable income of Rs. 95,19,50,282. During the assessment proceedings under section 143(3) the assessee was asked to furnish various details and on perusal of the same, the Assessing Officer noticed that the assessee company had received Rs. 46,29,99,611 from M/s. Texas Instruments India towards IT support services and out of the above receipt, the assessee has only declared 20 per cent as income accruing in India which comes to Rs. 9,25,99,922. The assessee submitted to the Assessing Officer that these receipts were received towards IT infrastructure supply services provided by the assessee company and in support of the same, t....
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....s deductible at source under section 195 of the Act by its subsidiary, TI India on the various payments to be made by it to the appellant. It is well settled that orders under section 195(2) are provisional and subject to modification in the regular assessment proceedings. An order under section 195(2) does not bind the Assessing Officer in regular proceedings. One has to go by the order in the regular assessment proceedings and not by the tentative order under section 195(2) of the Act. However, since TI India is seen to have deducted TDS and paid it to Govt. account as per the withholding order under section 195(2), it cannot be held liable for payment of any interest in terms of section 201(1A) of the Act. If the plea of the appellant were to be accepted, the appellant (the deductee or payee) would not be required to pay interest under section 234B of the Act and TI India (the deductor or payer) would also not be liable to pay interest under section 201(1A) because it has acted in compliance with the withholding order under section 195(2). In other words, neither the appellant nor TI India would be paying interest for delayed payment of taxes, thereby causing loss of revenue to ....
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....ability to pay the interest under section 234B of the Income-tax Act. He submitted that there was double taxation avoidance agreement between India and USA and as per Article 12(2) of the said agreement, fees for services included may be taxed in the contracting State in which they arise in accordance with the laws of the State. It was submitted that IT support services and cross charges charged by the assessee company to M/s. Texas Instruments Incorporated India represents certain portion of the common expenses incurred by the assessee company such as expenses on common IT infrastructure, system malfunction and repair expenses, expenses on maintenance and implementation of global information system etc., which are allotted to M/s. Texas Instruments Incorporated India on the basis of number of employees and such expenses being in the nature of reimbursement of actual expenses incurred by the assessee do not represent income in the hands of the assessee company and accordingly, the question of taxability of the same in India does not arise but however, the assessee has complied with the tax demand raised by the Assessing Officer and therefore, liability to pay tax has arisen only on....
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....bsp; High Court decisions 1. CIT v. Halliburton Offshore Services Inc. [2004] 271 ITR 395/140 Taxman 405 (Uttaranchal) 2. CIT v. Tide Water Marine Intl. Inc. [2009] 309 ITR 85/177 Taxman 150 (Uttarakhand) 3. DIT (International Taxation) v. NGC Network Asia LLC [2009] 313 ITR 187 (Mum.) 8. The learned DR on the other side supported the orders of the authorities below and submitted that the CIT(A) has considered all the judicial precedents relied upon by the assessee. In support of her contention, that the advance tax is payable by the assessee and that interest under section 234B is also leviable, she submitted that the under section 195(2) of the Income-tax Act the certificate issued by the Assessing Officer is a provisional certificate and hence, it cannot be relied upon by the assessee for taking an argument that he is not liable to pay advance tax. According to her provisional certificate issued under section 195(2) to the payer of the payments will only safeguard him from being saddled with interest under section 201(1A), but it cannot protect the assessee from the immunity from m....
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....erest under section 234B is leviable. She placed a copy of the said decision before us. 11. Having heard both the parties and having considered the rival contentions, we find that the basic question before us is as follows; 12. Once the payer has obtained a certificate under section 192(2) of the IT Act regarding taxability of the payments and where the entire amount of payments made to non-resident are covered by the provisions of TDS, the interest under section 234B can be levied on a non-resident company. 13. The CIT(A) and the learned DR have relied upon the decision of the Tribunal in the case of Ansaldo Energia SpA (supra) while the learned counsel for the assessee has relied upon a catena of decisions including that of the Special Bench of the Tribunal in the case of Motorola Inc. (supra) and also decisions of the Hon'ble High Courts of Uttaranchal and Uttarakhand and Bombay. 14. In the case of Ansaldo Energia SpA (supra), the co-ordinate Bench of this Tribunal after considering the decisions of the Special Bench in the case of Motorola Inc. (supra) and also the decision of the Hon'ble Supreme Court in the case of CIT v. Anjum M.H. Ghaswala [2001] 119 Taxman 352 ....
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....(a) to (c). Clause (d) of sub-section (1) of section 209, which is relevant reads as under; "(d) The income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may, be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable." 8. This clause categorically uses the expression 'deductible or collectable at source' and it is this clause which is incorporated by the Uttaranchal High Court in the said judgment (supra) in the manner already pointed above. The scheme of the Act in respect of non- residents is clear. Section 195 of the Act puts an obligation on the payer, i.e., any person responsible for paying to a non-resident, to deduct Income-tax at source at the rates in force from such payments excluding those items which are chargeable under the head ' Salaries'. Therefore, the entire ....