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2021 (3) TMI 832
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.... 1. The order of The Commissioner of Income tax (Appeals) is contrary to law, facts and in the circumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in confirming the action of the assessing officer in disallowing the legal and consultancy payment to K&L Gates and retainer fee payment to TWBCA for non deduction of tax under section 195 disregarding the fact that the payment is not chargeable to tax in India as services were rendered outside India and hence no withholding tax ligation in this case. 3. The Commissioner of Income tax (Appeals) ought to have appreciated that M/s.K&L Gates is a law firm providing professional services and the retainer fee for rendering professional services is not....
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....and consequently requirement of deduction of tax at sources does not arise. The case was taken up for scrutiny and during the course of assessment proceedings, the AO on the basis of evidences filed by the assessee opined that TDS is required to be deducted even though the payment is made to the offshore entities as per the provisions of section 195 of the Act, and accordingly for non-deduction of tax at source, expenditure cannot be allowed as deduction u/s.40(a)(i) of the Act. Accordingly, made disallowance of Rs. 28,34,926/- towards professional charges paid to TWB CA and KL Gates. Similarly, the AO has made additions towards provision for expenses being internet charges and professional charges u/s.40(a)(ia) of the Act, for non-deductio....
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.... than a company who is a resident of one of the Contracting States in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless the individual or firm has a fixed base in India. The ld.AR further submitted that even professional charges paid to a company of Chartered Accountants is outside the scope of provisions of section 195 of the Act, because as per Article 7 of DTAA between India and Australia, the profits of an enterprise of one of the Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. In this case, TWB CA does not have any permanent es....
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....ssional services in connection with dispute with Tranzact Financial Services and such payment has been made without deduction of tax at source u/s.195 of the Act. Similarly, the assessee has paid professional charges to M/s. TWB CA for filing of statutory returns and liaisoning with legal statutory authorities without deduction of tax at source u/s.195 of the Act. The AO has disallowed both payments u/s.40(a)(i) of the Act, for non-deduction of tax at source u/s.195 of the Act. We have considered arguments of the assessee in light of facts brought out by the AO and find that professional services rendered by an individual or a firm of individuals [other than a company] who is a resident of one of the Contracting States is taxable only....
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.... services are rendered outside India in connection with filing of statutory returns and liaison with statutory authorities. Therefore, said payment is outside the scope of provisions of section 195 of the Act, because it is neither in the nature of royalties as defined u/s.9(1)(vi) of the Act nor in the nature of fess for technical services because the nature of services rendered by the company of accountants does not make available technical knowledge, expertise, skill, know-how or processes to the assessee. Therefore, said payment is also outside the scope of provisions of section 195 of the Act and thus, the assessee is not liable to deduct tax at source u/s.195 of the Act. Therefore, we are of the considered view that the AO as well as ....