2017 (9) TMI 1405

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....& 2011-12 vide orders dated 25-03-2014 & 11-03-2014 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only common issue in these two appeals of Revenue is as regards to the orders of CIT(A) allowing the TDS holding that the provisions of section 40(a)(ii) would not apply. For this Revenue has raised grounds, which are identical in both the appeals and the grounds as raised in ITA No. 5580/Mum/2015 for AY 2011-12 reads as under : - "(a) On the facts and circumstances of the case and in law the Ld. CIT(A) erred in allowing the tax deducted at source (TDS) amounting to Rs. 20,61,771/- on payment of royalty pursuant to Technical Collaboration Agreement between Bureau Veritas India Pvt Ltd. and AE namely Burea....

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.... within the definition of tax on income for disallowance u/s 40(a)(ii) of the Act. The CIT(A) observed as under: - "5.1.1 Vide this ground the appellant company has agitated against the disallowance of Rs. 20,61,771/- u/s.40(a)(ii). The Ld. A.O. had observed in para 3 of the assessment order that the appellant company had claimed revenue expenses on account of royalty amounting to Rs. 1,93,65,834/- including TDS and cess of Rs. 20,61,771/-. After considering the reply of the appellant company, the ld AO disallowed an amount of Rs. 20,61.771/- u/s.40(a)(ii) of I.T. Act 1961. During the appellate proceedings, the appellant filed a written submission which find place in para 4 of this order. It was submitted by the appellant that A.O. did n....

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....tion of know- how and, therefore, deduction tinder section 35AB was permissible not only in respect of remittances made by assessee to ESVV but also in respect of income tax paid on said remittances. Similarly, the Hon'ble High Court of Punjab and Haryana in the case of Dashmesh Transport Co. (F) Ltd. Vs. CIT in ITA No.93 ITR 275 in similar circumstances has held that "the transferee may be made liable for the liability of the transferor. What really matters is that the liability of the transferor and not of the transferee and the mere fact that in certain circumstances that liability can be put on the shoulders of the transferee will not in any manner detract from the fact that the liability to tax all the same is that of the transfero....