TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 58
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....having deducted tax at source u/s. 195 of Income Tax Act? (B) Whether the ITAT has correctly interpreted the provision of 40(a)(i), Sec. 95 (sic 195) and 9(1)(v) of the Act? (C) Whether the ITAT as correct in law in holding that the amount of Rs. 19,94,704/- does not represent the interest but the sale consideration and no tax is required to be deducted?" 2. The respondent assessee had imported brush less motors from M/s Kashpo International Ltd., U.K. and had made payment of Rs. 19,94,704/-, which was claimed as expenditure. In the assessment order framed on 31st March, 1989, the Assessing Officer determined the net total income of the assessee but did not disturb or disallow this expenditure. 3. Commissioner of Income Tax (Central) - ....
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....ilure to pay the price, the Indian assessee has paid a sum of Rs. 19,94,704/-. In this manner, payment of Rs. 19,94,704/- constituted interest. He rejected the argument that the Bank which had made the payment had acted as the principal, observing that the bank was an agent as the respondent assessee instead of making the payment directly had utilized the services of said banker to make payment. The Assessing Officer deemed it appropriate to invoke Section 9(1)(i) of the Act and held that income of Rs. 19,94,704/- was taxable in India in India and as tax at source has not been deducted, Section 40(a)(i) was attracted. He also reworked computation of deduction under Section 80HHC in view of the said finding. 5. Commissioner of Income Tax (A....
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....ideration. Sale consideration paid to the foreign company for supply of goods would not be taxable in India. The appeal was dismissed observing that the Deputy Commissioner of Income Tax had agreed that the amount paid to the Kashpo International Ltd., U.K. did not relate to payment of interest and it represented the cost price finally settled for the material imported by the assessee. It was part of the purchase price and, therefore, no tax was required to be deducted. 7. Interest payments by a resident to a non-resident, if covered by Section 9(1)(v) is deemed to be income of the non-resident in India. Interest paid to a foreign party/seller for delayed payment of goods was dealt with Gujarat High Court in Commissioner of Income Tax vs. ....
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....ts as interest. This creates doubt in our mind whether Rs. 19,94,704/- paid was in fact interest for delayed payment or as stated by the Tribunal, the purchase price itself which was finally settled. If it was interest, then another aspect which required examination was whether the amount would be covered and exempt from payment of tax under Section 10(15)(iv)(c) of the Act, in which case tax at source was not required to be deducted. 8. Revenue is the appellant before us and has not placed the relevant documents under which the payments were made or relating to the settlement. Revenue has not placed before us even copy of the report given by the Deputy Commissioner of Income Tax. Full particulars and details regarding the purchase price, ....
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....ations would be found useful in deciding questions regarding the applicability of the provisions of section 9 in certain specific situations: XXXXXXXX (6) Sale by a non-resident to Indian customers either directly or through agents. - (a) Where a non-resident allows an Indian customer, facilities of extended credit for payment, there would be no assessment merely for this reason provided that (i) the contracts to sell were made outside India and (ii) the sales were made on a principal-to-principal basis. XXXXXXXX" The said circular has been withdrawn with effect from 22nd October, 2009 vide Circular No. 7 of 2009. The withdrawal does not affect impugned transaction as the same took place in the previous year relevant to the assessment ....