Sunku Satyanarayana Sanjay Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that disallowance u/s. 40(a)(i) for non-deduction of TDS from foreign remittance for business development, project management, marketing and related services is restore back to file of AO with a direction to the assessee to show that the income of Tevlon LLC USA is business income as per Article 5 & 7 of the DTAA.
Facts- The assessee is carrying on business activity of export of software development and distinct services as Proprietor of Versatiletech. The return was picked up for scrutiny for the reason of compliance with TDS provisions and also foreign outward remittances. It was found that assessee has remitted Rs.5,40,96,815 to Tavelon LLC USA without tax deduction at source. The claim of assessee is that same is not chargeable to tax in the hands of recipient in India and therefore the provisions of section 195 does not apply.
AO held that assessee is liable to deduct tax at source on payment of Rs.540,96,815 to Tavelon LLC as it is in the nature of fees for technical services and failure to do so resulted into disallowance u/s. 40(a)(i).
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
