TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 333
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....it, reopening was not on a mere change of opinion. Second grievance is that CIT(Appeals) deleted the disallowance made by the Assessing Officer relying on Section 40(a)(i) of Income-tax Act, 1961 (in short 'the Act') for payments made to non-residents without deducting tax at source. 2. When the issue came up, learned A.R. submitted that with regard to the second grievance of the Revenue, the matter stood covered in favour of assessee by this Tribunal vide its order dated 15th July, 2011 in I.T.A. No. 1542/Mds/10 relevant to assessment year 2005-06. As for the issue of reopening, learned A.R. submitted that such reopening was resorted to after completion of four years and it was merely based on a change of opinion, since original assessmen....
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....e had come up before this Tribunal in Revenue's appeal for assessment year 2005-06 also and this Tribunal, after considering the arguments on both sides, held as under at para 24 of its order dated 15th July, 2011: "24. We have perused the orders and heard the rival contentions. The payments were made by the assessee to non-residents. The payment made to International Tubular F2E was for rental and repairs to machinery and payment made to International Offshore Management was for drilling services. This has been mentioned by the Assessing Officer at para 6 of his assessment order. However, as per the Assessing Officer, it was not for the assessee to decide whether Section 44BB could be applied to such non-resident entities. Assessin....
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.... make deduction at lower rate taking 10% as the income of such non-resident entity. After considering its earlier decision for assessment year 2003-04, it was held at paras 6 and 7 of the order dated 4th February, 2011, as under:- "6. We have considered the rival submissions. At the outset we are primarily to decide as to whether to follow the decision of the co-ordinate Bench of this Tribunal in the assessee's own case for the assessment year 2003-04, supra, or to differ from the same. After a perusal of the decision of the Hon'ble Supreme Court in the case of GE India Technology Centre (P) Ltd. as also taking into consideration the views expressed by the Hon'ble jurisdictional High Court in the case of Hi Tech Arai reported in 321....
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....to be received etc. As per the sub-section (3) of sec. 44BB the nonresident can claim a lower profit. It is for the purpose of claiming lower profits that the non-resident must file a return and prove the same with support of his regular books of accounts and other documents and by complying with other conditions specified therein. If no return is filed, section 44BB(1) deems that the profits and gains of the business of the non-resident at 10% of the gross receipts. A perusal of the decision of the Hon'ble Supreme Court in the case of GE India Technology Centre (P) Ltd., referred to supra, clearly shows that the Hon'ble Supreme Court has categorically held that the obligation to deduct TDS is limited to the appropriate portion of income ch....
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....d 43 and 43A of the Act. Once the provisions of sections 28 to 41 and sections 43 & 43A stand excluded, the method of computing the business income of the non-resident on the basis of the books of accounts goes out of the picture. Then it is only the provisions of section 44AD, 44AE & 44AF which could be applied and the same obviously do not apply to the income of the non-resident companies. The Hon'ble Supreme Court while dealing with its own decision in the case of Transmission Corporation of A.P. Ltd., referred to supra, has categorically explained that the tax was liable to be deducted by the payer of the gross amount if such payment included in it an amount which was exigible to tax in India. This is not so in the present case. Here on....