Case Law Details
Brief of the case:
Assessee had made payment of supervision charges to the non-resident in Finland without deducting of TDS on the same by giving reason that as per article 13 of DTAA with Finland, TDS would not be required to be deducted on the above payment. But as per AO, article 15 of DTAA with Finland, according to which TDS was required to be deducted So AO made addition of supervision charges to the income of the assessee for non deduction of TDS because as per AO TDS is required to be deducted u/s 40(a)(i).
Aggrieved by the order of AO, assessee filed an appeal with CIT(A) who also upheld the decision of AO because of which assessee filed an appeal with ITAT who remanded back the order to CIT(A) by confirming that no doubt article 13 would not be applicable on the above case but the perquisite condition of article 15 was not ascertained.
Facts of the case:
Assessee made a payment of Rs 1.92 Cr in the form of supervision charges to the non-resident company without deduction of TDS which AO disallowed for non deduction of TDS u/s 40(a)(i). Assessee was of the view that according to the article 13 of DTAA with finland which was applicable on this case TDS was not required to be deducted but AO was of the view that Article 13 was not applicable but article 15 was applicable because payment was made to non-resident individuals not non-resident company.
Aggrieved by the order of AO ,assessee filed an appeal with CIT(A) who also confirmed the order of AO .Then assessee files an appeal with ITAT.
Contention of the assessee:
Assessee was of the view that as per article 13 of DTAA signed with finland TDS was not required to be deducted .So the disallowance made by the AO was not tenable.
Contention of the Revenue:
Revenue was of the view that article 13 of DTAA was applicable when payment was made to the non-resident company but in the present case payment was made to the individuals resident so in that case article 15 was applicable according to which TDS was required to be deducted which assessee failed so the addition made u/s 40(a)(i) should be allowed.
Held by ITAT:
ITAT held that article 13 was applicable when the technical services was “made available” to the resident of India in which “made available” meant that the services provided by the non-resident could be restored in any future need at his own. But in the present case services were provided by the non-resident individuals so article 15 was applicable but the pre-requisite condition that the each non-resident individual had to be present in India for more than 90 days which was not ascertained. So it remanded back the order to the CIT(A) to ascertain the above fact and then announce the decision.
