2015 (8) TMI 987

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....nsideration, the respondent assessee had remitted an amount of Rs. 1,11,35,305/- and 2,52,93, 968/- respectively to M/s Sheraton International Inc.,(for short, Sheraton) a US Company (for international marketing, publicity and sales / reservation related services provided by it) without deducting tax at source under Section 195 of the Income Tax Act. Prior to that also, for the earlier assessment years, no such deduction was made and the assessee had applied to the Assessing Officer for issuance of No Objection Certificates for making remittances for marketing, publicity and reservation, without deduction of tax at source for the reason that Sheraton had n o permanent establishment in India and therefore, business prof its earned by it coul....

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....itted on 14.7.2010 and ITA 478/2009 was admitted on 30.6.201 0 on the following substantial questions of law: 1 Whether the Tribunal was correct in holding that the income earned by M/s Sheraton International, USA in India was not liable for deduction of TDS u/s 195 r/w S.197 of the Act, in respect of payments made by the assessee as they did not have a permanent establishing in India as per S.9 r/w its explanation and consequently provisions of Ss.201(1) and 201(1A) of the Act was not attracted? 2 Whether the Tribunal was correct in not taking into consideration the principles enunciated by the Apex Court in Transmission Corporation of AP Ltd., Vs CIT - 239 ITR 587, where it clearly laid down that the taxability or not of....

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....payment of tax under the Double Taxation Avoidance Agreement ( DTAA). Since the recipient (Sheraton) of payment made by the respondent/assessee itself has been held not liable for payment of tax, then question of holding that respondent/assessee was liable to deduct tax at source did not arise. It is settled law that a person paying interest or any other sum to any non-resident is not liable to deduction of tax at source if such sum is not chargeable to tax under the Income Tax Act. Sri K V Aravind has placed reliance on the judgment of this Court in the case of Commissioner of Income Tax Vs Synopsis International Old Ltd - (2013) 212 Taxman 454 , to support his submission that payment made by the respondent assessee to Sheraton would be....

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....heraton would not arise. Although Sri Rupesh Jain, learned counsel for the respondent/assessee has stated that the decision in the case of Synopsis International (supra) is distinguishable on facts but, we need not go into the said question as we are clear that with regard to payment of tax by Sheraton or deduction of tax at source by the respondent/assessee would be governed by the decision of the Delhi High Court in the case of Sheraton International (supra). Even otherwise, as we have already observed herein above , the Revenue itself had given No Objection Certificates consistently for several years and allowed the respondent assessee to make payment to Sheraton without deducting tax at source and it was only after the decision of the A....