2015 (3) TMI 876

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....s 40(a)(i) in proceedings under section 143(3) of the Income-tax Act, 1961 (in short the 'Act'). 2. The assessee is a 'company'. It provides operation, maintenance, consultancy and training services. The assessee had filed its return on 1.12.2003 admitting loss of  32,84,971/-. The same was 'summarily' processed. Thereafter, the Assessing Officer completed a 'regular' assessment on 22.8.2006 reducing the loss declared to  22,74,779/-. 3. After framing of 'regular' assessment, the Assessing Officer formed reasons to believe that the assessee's income liable to be taxed had escaped assessment. He issued section 148 notice dated 31.3.2008. The assessee reiterated the income already returned. In re-assessment, the Assessing Offi....

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.... CIT(A) finds that these payments are in the nature of service charges exclusively paid towards execution of projects in Qatar and covered by exclusion clause u/s 9(1)(vii)(b) of the Act. He has followed case law of the 'tribunal' in Ajapa Integrated Project Management Consultant Pvt. Ltd I.T.A.No.2169/Mds/2010 holding this 'exclusion' applicable if the payment is made to a non-resident for the purpose of earning income from a source outside India. The CIT(A) concludes that these payments pertain to the assessee/consultancy firm's overseas Nigerian contracts. So, the fees paid to such consultants abroad have been held to be for services utilized in the business carried outside India not liable for any TDS deduction. The CIT(A) has d....

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.... technical or other personnel and covered by the explanation to 2 of Sec.9(1)(vii) of the Act. Hence the provisions of Sec 40(a)(i) are attracted; 2.5 The decision of the Apex Court in the case of M/s. Transmission Corporation of Andhra Pradesh reported in (239 ITR 589 (SC) clearly held that TDS should be effected at the rates in force, if the amount is paid to a non-resident. The rights of the payee or the recipient are fully safeguarded under sections 195(2), 195(3) and 197 2.6 The assessee has not obtained certificate u/s.195(2) of the Act to be exempt from the purview of TDS and hence the AO has rightly disallowed the Commission paid to foreign agents, u/s 40(a)(i) of the I.T. Act 2.7 It is submitted that the assessee did not s....