Case Law Details
Reliance Commercial Dealers Limited Vs CIT (ITAT Mumbai)
Facts- The assessee is a company engaged in the business of Air Transport of Passengers and is a holder of Non-Scheduled Air Transport (Passenger) Services (NSOP) permit granted by the Director General of Civil Aviation / Ministry of Civil Aviation.
During the Financial Year 2015-16, the assessee had made payment of USD 61,200 (amounting to Rs.40,30,020) to Flight Safety International Inc, USA for availing training of pilots. However, in the absence of PAN of deductee, the assessee deducted tax at being grossed up rate of 20% under Section 195A and accordingly made payments. The assessee filed an appeal before the CIT(A) under Section 248 contending that the deductee, being a tax resident of the USA and Double Taxation Avoidance Agreement between India and USA are applicable to the transaction in question and claimed as per Article 12 of DTAA, the rate of tax on “fees for included services” shall not exceed 15%. However, the CIT(A) dismissed assessee’s appeal as not maintainable, Aggrieved, the assessee appealed before the tribunal.
Conclusion- Held that the word no tax was required to be deducted in Section 248 should be interpreted in such a manner so as to include claim of the deductor that no tax was required to be deducted in excess of deductible at rates in force.
The words, “no tax was required to be deducted on such income” would mean that there is denial of liability to the extent of excess tax deducted at source compared to rates in force as per Section 195(1). Thus, intention of the legislature would not render the deductor remediless merely because it admits deductibility of tax at source but disputes the rate of deduction. Thus, in our opinion, the judgment of the Hon‟ble Supreme Court and principle laid down therein in the case of CIT vs. Wesman Engg (supra) would also apply to the amendment to Section 248 of the Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
