Case Law Details
ACIT Vs Caterpillar India Pvt. Ltd. (ITAT Chennai)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Chennai recently delivered an important verdict in the case of ACIT vs. Caterpillar India Pvt. Ltd. The case involved two significant issues: disallowance under section 40(a)(i) for lack of tax deduction at source on certain foreign payments and the rate of depreciation for computer software. This article provides a detailed analysis of the case and the ITAT’s decision.
Detailed Analysis:
In the case of ACIT vs. Caterpillar India Pvt. Ltd., two key issues were under consideration:
1. Disallowance under Section 40(a)(i): The first issue revolved around a disallowance made by the assessing officer under section 40(a)(i) of the Income Tax Act for the non-deduction of tax at source on specific foreign payments made by the assessee. The payments were related to the secondment of employees from overseas group entities to the assessee’s Indian operations. The assessing officer contended that these payments constituted fees for included services under the Double Taxation Avoidance Agreement (DTAA) and fees for technical services under section 9(1)(vii) of the Income Tax Act, leading to disallowance.
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