Income Tax : Tax on dividends, interest, royalties and FTS earned by non-residents is governed by the more beneficial rate under the Income-tax...
Income Tax : The applicable withholding tax depends on the Income-tax Act or the relevant DTAA, whichever is more beneficial. Treaty rates diff...
Income Tax : Section 194-IA requires buyers of immovable property to deduct TDS at 1% when the sale consideration or stamp duty value is ₹50 ...
Income Tax : When a resident buys unlisted shares from a non-resident, TDS must be deducted on gross consideration under Section 195, subject t...
Income Tax : Payments for sports sponsorship that grant global trademark usage can be split as royalty. Courts upheld withholding where tradema...
Income Tax : Direct & Indirect Taxes : Monthly Updates Date & Time – 3rd December 2022 (Time:11 a.m to 12:30 p.m) Tax Guru is Organiz...
Income Tax : Clarification on certain procedural and technical issues regarding the Income Disclosure Scheme, 2016 (IDS) under section 119 of t...
Income Tax : Finance Act, 2012 extended the obligation to withhold taxes to non- residents irrespective of whether the non-resident has -...
Income Tax : Government has recently modified the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and the Liberalized Re...
Income Tax : The Supreme Court judgement on Vodafone tax case seems to have opened a Pandora's box with exporters too expressing reservation on...
Income Tax : Interest income earned by a foreign bank from foreign currency loans extended to Indian corporates was taxable on a gross basis. S...
Income Tax : ITAT Delhi held legal services are not FTS under Section 9(1)(vii) and directed partner-wise DTAA examination. FTS addition was de...
Income Tax : ITAT Delhi held that IT, salary and travel reimbursements without any profit element were not taxable and deleted the disallowance...
Income Tax : Delhi High Court held the ITAT failed to properly examine the ‘make available’ test for secondment payments, set aside its ord...
Income Tax : ITAT held no TDS was required as the Revenue failed to prove the services made technical knowledge available under the India-US DT...
Income Tax : CBDT notifies the Income-tax (Seventh Amendment) Rules, 2025, updating Forms 26Q and 27Q to include Section 194T on payments to fi...
Income Tax : it has been decided that no such request for Form 15E for certificates under section 195(2) & 195(7) for a particular Financial Ye...
Income Tax : CBDT vide notification No. 18/2021-Income Tax, Dated: March 16, 2021 inserted new rule 29BA. Application for grant of certificate ...
Income Tax : Clarification on orders dated 31.03.2020 and 03.04.2020 issued under section 119 of the Income-tax Act, 1961 (the Act) by CBDT vid...
Income Tax : In case of pending applications for lower/nil rate of TDS/TCS for F.Y. 2019-20, the Assessing Officers have been directed to dispo...
Once the payment of ‘off-the shelf software’ held not to be chargeable to tax as a royalty on the basis of the certificate obtained from a chartered accountant, no penalty and interest can be levied on the grounds that the assessee did not take prior approval of the assessing officer under section 195(2) of the Act.
Mumbai Income-tax Appellate Tribunal in the case of M/s. Goldcrest Exports v. ITO held that compensation payable for breach of contract to a foreign company would not be taxable in the hands of the foreign company in the absence of a permanent establishment of the foreign company in India. The Tribunal further held that interest included in compensation merges with and partakes the character of compensation itself, and hence, would not be taxable under the tax treaty between India and UK . Therefore, deduction claimed by the assessee for compensation including interest cannot be disallowed on account of non-withholding of taxes therefrom.
No requirement to approach the Tax Officer for nil withholding certificate under section 195(2) where the non-resident is not liable to tax and further no disallowance can be made under section 40(a)(i) of the Income-tax Act, 1961 In a recent decision, the Chennai Bench of the Income-tax Appellate Tribunal in the case of VA Tech Wabag Ltd. v. ACIT [2010-TII-109-ITAT-MAD-INTL] held that in a case where the payment for services was not taxable in India under the provisions of a Double Tax Avoidance Agreement (“the tax treaty”), there was no requirement for applying to the tax officer for a nil withholding certificate under section 195(2) of the Income-tax Act, 1961 (“the Act”). It was also held that as section 195 of the Act was not applicable, the amount paid for services could not be disallowed under section 40(a)(i) of the Act.
When the assessee is prevented from deducting tax u/s 195, the question of his not performing the obligation under law does not arise and thus he cannot be held a defaulter. The assessee cannot be held to be an assessee in default in terms of section 201 and 201(1A) of the Act. This is a case of impossibility of performance and the assessee is released from the obligation and hence the assessee is not an assessee in default.
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.
Central Bank of India v. DCIT- In view of non-discrimination clause under the India-USA tax treaty, the non-resident should be given same treatment as given to resident’s taxpayers. Accordingly, the payment made to USA entities cannot be disallowed on account of non deduction of tax at source.
Article 26(3) of the India-USA DTAA protects the interest of non residents vis-a-vis residents. Article 26(3) provides that payment made to a non-resident will be deductible under the same conditions as if the payment were made to a resident. The exceptions provided in Article 26(3) are not applicable on facts. As per s. 40(a)(i), no disallowance can be made in respect of payments to residents on the ground of non-deduction of tax at source. Therefore, in view of Article 26(3), no disallowance can be made even in case of payments to non-residents even if the amount is found taxable in India in their hands. Herbal Life International 101 ITD 450 (Del) followed.
Compensation including interest on cancellation of contract not taxable in the absence of Permanent Establishment of the non-resident in India under India-UK tax treaty
Though the damages included an element of interest, the same is not assessable because in a decree or arbitration award, the amount loses its original character and assumes the character of a judgment debt. In substance, interest partake the character of the compensation and is not assessable as interest. Islamic Investment 265 ITR 254 (Bom) followed.
Appellant(s) are the distributors of imported prepackaged shrink wrapped standardized software from Microsoft and other Suppliers outside India. During the relevant assessment year(s) appellant(s) made payments to the said software Suppliers which according to the appellant(s) represented the purchase price of the abovementioned software. The ITO(TDS) held that since the sale of software included a license to use the same
