Disallowance u/s 40(a)(i) unsustainable as consideration not regarded as income deemed to accrue or arise in India

Subex Technologies Limited Vs JCIT (ITAT Bangalore)

ITAT Bangalore held that disallowance u/s 40(a)(i) unsustainable as assessee is not liable to deduct TDS for reason that consideration received couldn’t have been regarded as income deemed to accrue or arise in India.

Facts-

The Tribunal had disposed of the above case vide its order dated 29.07.2016. The Tribunal decided the issue in favour of the assessee. The Tribunal held that the payment made to the Associate Enterprise (AE) in USA amounting to Rs.62,49,83,348 was merely a journal entry, hence, need for tax deduction at source u/s 195 of the I.T.Act does not arise and the lower authorities erred in disallowing the impugned expenditure u/s 40(a)(i) of the I.T.Act. The Revenue being aggrieved by the order of the ITAT, filed an appeal before the Hon’ble High Court u/s 260A of the I.T.Act. The Hon’ble High Court vide judgment dated 21.12.2020 in ITA No.180/2017, restored the matter to the ITAT. The Hon’ble High Court directed the Tribunal to consider afresh, the claim of the assessee u/s 40(a)(i) of the I.T.Act.

Conclusion-

Please become a Premium member. If you are already a Premium member, login here to access the full content.