TaxTMI 
TaxTMI 
2026 (10) TMI 1271
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....he assessment order dated 26/09/2022 passed u/s. 143(3) r.w.s. 144B of the Act. 2. The assessee has raised the following ground of appeal: "1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals), erred in dismissing the appeal and thereby upholding the disallowance made of Rs. 55,09,938/- under section 40(a)(i) of the Act. The appellant craves leave to add, amend or delete any or all of the grounds of appeal at any time." 2.1. Brief facts of the case are as under:- Assessee is a partnership firm engaged in the business of providing project consultancy and export of pharmaceutical equipments. The assessee filed its return of income declaring total income of....
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....cally submitted that the recipient was incorporated in the USA and had no Permanent Establishment in India. The assessee also contended that the services were rendered outside India in connection with its overseas business/export activities and therefore the commission income in the hands of the recipient did not accrue or arise in India. 2.5. The Ld. AO, however, did not accept the explanation. The Ld. AO observed that the documents furnished by the assessee did not establish the tax residency of IBIT for the relevant F.Y. 2019- 20. The Ld. AO further referred to Form No.15CB wherein the nature of remittance was described as "Consulting Services" and held that the assessee was liable to deduct tax at source from the payments made to the....
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....Technology Inc. is concerned, the payment represented commission for services rendered entirely outside India. It was submitted that the recipient did not have any Permanent Establishment, office or business operations in India. The Ld. AR drew our attention to the documents placed in the paper book in support of the contention that IBIT is an entity incorporated in the United States of America. 4.1. The Ld. AR specifically referred to page 62 of the paper book, containing a Certificate of Status issued by the State of Florida, and page 72, containing Form W-9 wherein M/s. Incentive Building Information Technology Inc. is shown as a U.S. C-Corporation having its address at Jamaica, New York, USA, along with its U.S. taxpayer identificati....
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....he record placed before us. 5. The issue before us is whether the payment made by the assessee to M/s. Incentive Building Information Technology Inc., a non-resident entity, was liable for deduction of tax at source u/s. 195 of the Act and, consequently, whether non-deduction of tax warranted disallowance u/s. 40(a)(i) of the Act. 5.1. At the outset, we find it necessary to clarify the nature of the documents relied upon by the assessee. At page 62 of the paper book is a Certificate of Status issued by the State of Florida, evidencing the incorporation/status of M/s. Incentive Building Information Technology Inc. as a corporation under the laws of the State of Florida. Page 72 contains Form W-9, wherein the recipient is shown as a U.S....
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....ion 90(4) itself provides that a non-resident shall not be entitled to claim relief under the relevant agreement unless a certificate of residence is obtained from the Government of the concerned country. However, absence of such certificate cannot, by itself, create a charge of tax under the domestic provisions where the income is otherwise not chargeable to tax in India. The chargeability under the Act has therefore to be examined independently before considering the consequences of non-furnishing of the TRC. 5.5. Coming to the facts of the present case, the assessment order itself repeatedly describes the payment as commission expenditure. It is the consistent case of the assessee that IBIT rendered services outside India in connectio....
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....determine the true character of the payment. The nature of a transaction has to be ascertained from the underlying agreement, invoices, actual services rendered and surrounding facts. Significantly, the Ld. AO himself has throughout dealt with the payment as commission expenditure. There is no finding as to any specific technical, managerial or consultancy service having been rendered by IBIT in India, nor has any material been brought on record to demonstrate that the recipient made available any technical knowledge or rendered services of such nature as would, on the facts recorded by the lower authorities, independently establish chargeability in India. 5.8. We, therefore, find that the disallowance has substantially proceeded on the ....