IN THE ITAT CHENNAI BENCH ‘A’
Ajappa Integrated Project Management Consultants (P.) Ltd.
V/s.
Assistant Commissioner of Income-tax, Company Circle-I (2), Chennai
IT Appeal Nos. 349 & 578 (Mds.) of 2012
[Assessment Year 2008-09]
JUNE 25, 2012
ORDER
N.S. Saini, Accountant Member
These are cross appeals filed by the assessee and Revenue against the order of the CIT(A)-III, Chennai, dated 21.12.2011, passed in assessment year 2008-09.
2. In the assessee’s appeal, the assessee has taken the following grounds of appeal:
“1. The order of the CIT(A) is contrary to the law, facts and circumstances of the case in so far as the same is decided against the assessee.
2. The CIT(A) erred in confirming the disallowance of Rs. 61,19,632/- under Sec.40(a)(i) towards consultancy charges/ fee for technical service paid to a non-resident individuals of Indian origin working in off shore oil and gas exploration projects in India.
3. The CIT(A) erred in holding that the proportionate disallowance is called for as the rate of TDS applied was only 11.33 % instead of 33.99% on payments made to non-residents for services rendered in India.
4. The CIT(A) failed to note that Sec.44BB of the Act is attracted to the facts of the case and so the appropriate rate of tax would be only 3.399% whereas the appellant has deducted more tax at the rate of 11.33% which in anyway does not warrant any proportionate disallowance in the manner done by the Assessing officer.
5. The CIT(A)ought to have appreciated that the appellant had engaged the services of nine NRI’s who are not liable to tax in India and the only issue relates to the rate of TDS to be applied.
6. The CIT(A) has not given due to weightage to the various arguments advanced by the assessee with regard to the scope of Sec. 44BB as applicable to business or profession.
7. The appellant craves leave to adduce additional grounds of appeal at the time of hearing.”
3. The sole issue involved in the above grounds of appeal relates to disallowance of Rs. 61,19,632/- u/s 40(a)(i) towards consultancy charges/fee for technical services paid to non-resident individuals of Indian origin working in off-shore oil and gas exploration projects in India.
4. The Assessing Officer, while making the disallowance, has held as under:
3.1 In respect of payments made to non-residents for services rendered in India that the assessee ought to have deducted taxes @ 33.99% as applicable for non-resident individuals Since the assessee had deducted taxes only @ 11.33%, proportionate disallowance has to be made for the short deduction of tax.
