Court: Mumbai bench of the Income-tax Appellate Tribunal
Citation: ACIT Vs. Monitor India Pvt. Ltd. [2010-TII-138-ITAT-MUM-INTL] (Judgment date- 8 October 2010, Assessment Year 1999- 2000)
Brief : Recently, the Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT v. Monitor India Pvt. Ltd [2010-TII-138-ITAT-MUM-INTL] (Judgment date – 8 October 2010, Assessment Year 1999-2000).held that the taxpayer is under no obligation to approach the Assessing Officer and is entitled to remit monies abroad without deduction of tax at source if it is of the opinion that the remittance was wholly exempt from Indian taxes.
Facts of the case
- The taxpayer is a company engaged in the management, technical advisory and consultancy services.
- The taxpayer made payments of professional fees to Monitor Group of Companies which were companies outside India. On the basis of legal opinion, the taxpayer did not deduct any taxes from the remittance of the professional fees.
- The Assessing Officer (AO) disallowed the claim for professional fees under section 40(a)(i) of the Income-tax Act, 1961 (the Act).
Tax department’s contention
- Payment of professional fees to Monitor Group of companies resident in Madrid, Manila, Paris and Seoul should not be allowed as a deduction since the taxpayer did not deduct taxes at source from those payments.
- The taxpayer ought to have approached the AO with an application under section 195(2) of the Act, seeking permission to remit the monies without deduction of tax.
Tribunal’s ruling
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