2014 (3) TMI 1154

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....e only issue raised by Revenue is with respect to dis-allowance u/s.40a(i) of the Income Tax Act, 1961 (herein after referred to as 'the Act') for non-deduction of tax at source on the payment of 'Royalty' and 'Technical Fee' by the assessee. 2. The assessee is in the business of manufacturing and trading of automobile parts and accessories. The assessee company is in technical collaboration with a Korean Company. As per license and technical agreement between the assessee and the Korean Company, the assessee is under obligation to pay running Royalty and Technical Assistance Fee on regular basis. The Assessing Officer held that the TDS has been deducted but the amount has been deposited after the expiry of statutory time limit prescr....

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....aid in the next year which is against the law. The ld.DR further submitted that the provisions of DTAA are not applicable on the assessee as claimed by the assessee. The assessee has debited the payments of Royalty and technical fee in one year and has deposited the TDS in the next Financial Year. 4. On the other hand, Shri Raghunathan, appearing on behalf of the assessee vehemently supported the order of the CIT(Appeals) and prayed for the dismissal of the appeals of the assessee. The ld.Counsel for the assessee submitted that the tax deducted at source has been paid within the time limit prescribed under the provisions of section 200(1) of the Act. 5. We have heard the submissions made by the representatives of both the sides. We ha....

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....s no doubt true that the provision may be used as a device to defer the tax for any length of time by mutual understanding of the parties, however, to come to such a conclusion in a particular case, the conduct of the parties has to be seen and thereafter a conclusion has to be arrived at that deferment of payment was a device used for the purpose of delaying the payment of tax. In the present case no such conclusion has been drawn. Rather it has been submitted on behalf of the appellant that the same practice has been followed for the past several years and that the AO has picked up the cases for three assessment years viz 2003-04, 2004-05 & 2005-06 for making the aforesaid disallowances. It was further submitted that there was no....