Non-compliance of provisions of TDS where payment is made to Non-Resident - (New) Section 35(b)(ii) / (Old) Section 40(a)(i)

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....ther provisions of Chapter IV-D (business deductions) and blocks certain expenses from being claimed, even if they otherwise look like legitimate business expenses. Payments to non-residents other then Salary [section 35(b)(ii)]  If: • TDS is required to be deducted under Chapter XIX-B, and • Either: • Not deducted, OR • Deducted ....

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....he year in which TDS is actually paid. (II) Special relief where payer is not "assessee in default" • If the payer fails to deduct TDS under Chapter XIX-B, BUT • Is not treated as an assessee in default under section 398(2) (typically because the payee has already paid tax and filed return)  • Then: • It is deemed that: ....

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.... is interest, royalty, fees for technical services or any other sum (other than salary) chargeable under Income Tax Act and the sums must be taxable in the hands of the recipient under the Income tax Act. • The aforesaid sum is paid/ payable outside India to a non-resident or a foreign company, and in India to a non-resident or a foreign company and tax is deductible at source on the ....

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....¢ Where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to section 201(1), then, for the purposes of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income....