2019 (8) TMI 641

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....ent was completed u/s.143(3) r.w.s. 144C of the Income-tax Act, 1961 (hereinafter also called `the Act') on 12-09-2011. Subsequently, it was observed that the assessee had made payments to the tune of Rs. 5,19,28,969/- on account of various I.T. support services, use or right to use software, access to server (scientific equipment) and leased line charges to Deere & Co., USA, its Associated Enterprise (AE), without complying with the provisions relating to deduction of tax at source. Such an amount was grossed up u/s 195A to Rs. 6,10,92,905/-. Notice was issued u/s.148 of the Act on 29-03-2014, which was followed by the assessment order dated 16-02-2015, making an addition of Rs. 6,10,92,905/- u/s.40(a)(i) of the Act. The assessee assailed ....

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....of web based training. Thus, it is seen that the extant assessment order as well as the impugned order, making disallowance u/s.40(a)(i), are based on the respective orders passed in the proceedings u/s.201(1)/(1A) of the Act for the same year. It is a matter of record that the assessee preferred an appeal against the order passed by the ld. CIT(A) in relation to section 201(1)/(1A) before the Tribunal, which has since been decided in ITA Nos. 905 & 906/PUN/2015 vide order dated 23-01-2019, a copy of which has been placed on the record. Relevant discussion regarding leased line charges has been made at page 81 para 95 onwards of the order. After considering the legal position on this issue, the Tribunal has come to a conclusion in para 1....

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....l knowledge was imparted by the service provider and hence, there was no liability upon the assessee to deduct tax at source on the aforesaid payments. 5. Crux of the matter is that all the items of disallowance u/s.40(a)(i) of the Act in the instant proceedings, including the enhancement made by the ld. CIT(A) on two scores, have emanated from the order passed by the authorities u/s.201(1)/201(1A) of the Act. Since the Tribunal in its aforenoted order has held that the assessee is not liable for deduction of tax at source, the sequitur is that there cannot be any disallowance u/s.40(a)(i) of the Act as the same can be made only when a person responsible for paying any sum including royalty and fees for technical services etc., outside I....