QAI India Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi held that income of non-resident is not liable for deduction of tax at source u/s. 195 as amount paid is covered in exception provided in section 9(1)(vii)(b) of the Income Tax Act since project has been carried outside India and services are utilised outside India.
Facts- The assessees company is a limited company engaged in the business of Software development. The company provides the software related services such as software designing engineering, software training and consultancy services. Certification and management services.
The matter involved here is with regard to confirmation of disallowance of Rs. 54,65,508/- paid to Everest Global Inc. by invoking provisions of section 40(a)(1) read with section 195 of the Act.
Conclusion- The fee for technical services was paid by the assessee for the purpose of making or earning income from any source outside India. Therefore, clearly section 9(1)(vii)(b) of the Act applied and income earned by such non – residents cannot be deemed to accrue or arising in India and the fees for technical services was not taxable.
Held that work order was issued outside country for making an income from a source outside the country. The amount paid are covered in exception provided in section 9(1)(vii)(b). Hence the assessee was not required to deduct tax at source. Addition made by the AO and confirmed by CIT(A) is deleted. The appeal of the assessee is liable to be allowed.
