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 REQUIREMENTS U/S 195

BY: CA SANJAY K. AGARWAL

 DISCUSSION ON TDS PROVISIONS 

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 Sec. 195- Provisions in brief •  Tax to be deducted on any interest or any other sum

chargeable under the provisions of this Act (other thansalaries).

• Where the  person responsible for making the

 payment  is of the opinion that such sum (or a proportionthereof) is not the income chargeable in case of recipient,an application to be made to AO  to determine thatproportion of such sum so chargeable. [s.s (2) of sec. 195]

Non Resident/oreign !ompany (according to def u/s "/#(#$A)of the Act)

or %um !hargeable to Tax under the Act excl. %alaries(according to section & read 'ith section () R*A+ W,T- %*!

(#))

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 Sec. 195!"/#"$$.

•  Recipient of interest or other sum (other

than salary) may make an %&&'ic%(ion  in

the prescribed form (o ()e *O and obtaina certificate authorizing the person

responsible for making such payment to

 pay without deducting tax thereon.

 Note: application to be made in form 15C by banking Co. and 15D by others

recipients (carrying on business/ profession in India through branch for any sum

not being int./di. [Rule 29B]

certificate issued u/s 1!5("# to be alid until cancelled by $%.

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 Sec. 195+ # & 'erson referred to in sec. 1!5(1# shall furnish the

information relating to payment of any sum in Form No. 15CA, afterobtaining a certificate from a Chartered $ccountant in Form No.

15CB. [read !"# Rule $%BB !&'er"ed .e.(. 1)*%)2**9]

Information to be furnished electronically. rule ")**+

 Note: D,I-(ystems# to proide the necessary procedures formats and standards

and to deal 0ith day to day administration in relation to the information furnished.

Circular no. )5! )2) are no0 not releant because of 3ule ")**.

 No re4uirement of obtaining 15C* in case of 0hile remitting consular

receipts abroad by diplomatic missions.circular no. !/66!dated "6&11&

66!

3ef: Circular no. 7/66! dated !&62&66! proiding the manner for

submitting and processing the details of payment.

Contd….

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 Sec. 9- % brief • %ection de5nes Income deemed to accrue or arise

in India. ollo'ing payments are covered6

i. all income through or from any businessconnection in India/ any property in India/ any

asset or source of income in India/ capital assetsituated in India.

ii. income under the head 7Salaries80 if it is earned inIndia.

iii. income under the head 7Salaries” payable by theGovernment to a citizen of India for serviceoutside India 9

iv. dividend paid by an ,ndian company outside ,ndia 9

v. ,nterest

vi. Royalty

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 Sec. 9- no(es [Int. ro!alt! "#$ shall be deemed to be

income accr%ing or arising in India if paid b!&o't. or a resident person [ecept for %tiliingthe f%nd propert!, intellect%al rights,information ser'ices for an! b%siness or

 profession or earning income o%tside India]

"%rther, s%ch income from non*resdt. Alsoincl%ded pro'ided the same is in connection

+ith b%sinessprofession in India or earningincome in India.]

#he term ro!alt!- is dened in /planation2of cla%se('i ('ii) of s.9(1) respecti'el!.

However, where DTAA exists between two

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 ISSUE  P%en( (o non-resi0en( for P,rc)%se of sof(%re c%nno( be

(re%(e0 %s ro%'( 2r.. *r(. 13 of DT**- In0i%-Sin4%&ore/

%r(ic'e of ()e In0i%-US* DT**6-

 7%ns%i Nero'%c P%in(s 8(0. v. *00'. DIT 31" 1!# TT: !#3

M,."/ D. DIT v. M/s Re'i%nce In0,s(ries 8(0.; IT* No.

119/M,/39

$ computer soft0are 0hen put in to a media and sold

 becomes goods and thus payment for purchase of soft0arecannot be treated as royalty& no liability to deduct -$ u/s 1!5.

ince definition o( ro+al"+ in D$$ clauses oerrides

definition of sec. !(1#(ii# and foreign party not haing any '8

in India.

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 RU8E !

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 Me%nin4 of R%(es In orce

•  *s &er Sec(ion 3!*"

 9rate or rates of income ta specified in this behalf in the;inance $ct of the releant year<

 or

the rate or rates of income tax specified in #$""

Circular No. )= dated "6/16/1!!5 : (1!!5# 2 -C3 12) (t.# /12 I-3 (t.# 171

In case of remittance to a country 0ith 0hich D-$$ is in

force the ta 0ill be deducted at rate proided in ;inance $ct or D-$$

#!# e-er !' more e&e(!!al "o "#e a''e''ee

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 *&&'ic%bi'i( of S,rc)%r4e in c%se of NR/orei4n Co.

/+0e o( A''e''ee C S3C

Sur#ar4e

 Non resident (other than aforeign co.# other than alary+

$pplicable N.$.

 Non resident i.r.o salary $pplicable N.$.

;oreign Co. $pplicable > ? (if incomeafter deduction

eceeds 3s. 1 Cr.#

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 ISSUES on Sec. 1953"

*+T v. wara- a/da 0td. 123%%4 %3 taxmann.com%56 "7 8 H$ ,

• held that 0here no ob@ection certificate granted to assessee u/s1!5(#

 permitting it for non&deduction of -$ 0as neer cancelled it ould

&o" e "rea"ed a' a''e''ee !& de(aul" (or &o&)dedu"!o& o( "a a"'oure

*+T v9s :ai ;ngineering

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con(0$

  *+T v. ;lbee ervices "7$ 0td. 1233%4 %%'Taxmann #%6 "@om.$

 The 5ndings given u/s &(#) 'ill not preclude the

department from ta?ing contrary vie' in theassessment proceedings.

 1*hloride +ndia 0td. v. +T "%&6#$ 2' TT: '35

"*al. Trib.$4 %ec. &(#) is for determining the

appropriate proportion of such sum 'hich is

chargeable to tax not for determining the rate of tax

that has to be applied to the appropriate proportion of

the sum held to be chargeable to tax .

 1(BA Buality yatems >egistrar 0td. v. Dy. *+T

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con(0$

  1@**+ v. D+T ";xemption$ "233'$ +TD 2#?

"um.$4While acting u/s &(#)0 A= is duty bound to

ma?e re

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 RE8EV*NTCIRCU8*RS 

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Circ,'%r no. #/39 0(. 39-+-39

CBDT ! "#$ITT%!C# T !!&"#SID#!TS '!D#" S#CTI! ()*

•  T+% u/s & mandatory from payments madeor credit given to nonresidents at the rates inforce. The R:, has also mandated that exceptin the case of certain personal remittances'hich have been speci5cally exempted0 no

remittance shall be made to a non&resident unless !C has been obtainedfrom the Income Ta+ Department.

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contdA

• remittances allo'ed 'ithout N=!0 if the personma?ing the remittance furnishes anunderta?ing (addressed to the A= orm

&!A) accompanied by a certi5cate from anAccountant in a speci5ed format orm &!:B

•  The certi5cate and underta?ing are to besubmitted (in duplicate) to the R:,/ authorised

dealers 'ho in turn are re

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revise0 &roce0,re for f,rnis)in4 infor%(ion re4%r0in4

rei((%nces bein4 %0e (o non-resi0en(s .e.f. 1s(  :,'; 39

(i) The remitter 'ill obtain a certi5cate from anaccountant (other than employee) in orm &!:.

(ii) The remitter 'ill then access the 'ebsite toelectronically upload the remittance details to the

+epartment in orm &!A (underta?ing). Theinformation to be furnished in orm &!A is to be5lled using the information contained in orm &!:(certi5cate).

(iii) The remitter 'ill then ta?e a print out of this 5lledup orm &!A ('hich 'ill bear anac?no'ledgement number generated by thesystem) and sign it. 1orm (*C% 2underta3in45can be si4ned by the person authorised to

si4n the return of income of the remitter or a

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contdA

• iv) The duly signed orm &!A (underta?ing) andorm &!: (certi5cate)0 'ill be submitted in duplicateto the R:, / authoriCed dealer. The R:,/ authoriCed

dealer 'ill in turn for'ard a copy the certi5cate andunderta?ing to the A= concerned.

• (v)A remitter 'ho has obtained a certi5cate from theA= regarding the rate at or amount on 'hich the taxis to be deducted is not re

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 S(e&s in brief •  

. =btains &!:

#. access '''.tinnsdl.com

$. *lectronically uploads the remittance details in orm&!A

3. Ta?es printout of 5lled underta?ing form (&!A) 'ithsystem generated ac?no'ledgement number.

&. @rintout of the underta?ing form (&!A) is signed

". %ubmits the signed paper underta?ing form to theR:,/AuthoriCed dealer along 'ith certi5cate of anAccountant in duplicate.

1. R:,/AuthoriCed dealer remits the Amount

2. R:,/AuthoriCed dealer remits the Amount

rem!""er

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 Ref,n0 of TDS$$$$@

Circ,'%r No. /3 D%(e0 3!/1/3 

*elo0 mentioned cases are referred in it for consideration of refund in case of N.3.

Contract is cancelled and no remittance to N.3.

3emittance made to N.3. but the contract is cancelled and the remitted amount has beenreturned.

Contract cancelled after partial eecution and no remittance to N.3. for non eecuted part.

Contract cancelled after partial eecution and remittance related to non eecuted part ismade to N.3. either the remitted amount has been returned or not but the ta 0asdeducted and deposited.

8emption of the remittance either by amendment in la0 or by notification.

%rder is passed under section 157 or 7= or 27 reducing the ta liability or deductorunder section 1!5.

Deduction of ta t0ice by mistake.

'ayment of ta on account of grossing up 0hich 0as not re4uired under the proisions.

-a deducted at higher rate ho0eer lo0er rate is prescribed in the releant D-$$

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 Ref,n0 of TDS$$$$@

Circ,'%r No. /3 D%(e0 3!/1/3 

In the aboe refereed cases either the N.3. not haing receied any payment0ould not apply for refund or made no claim for refund as he has no furtherdealing 0ith then resident deductor of ta or the ta is to be born by theresident deductor. -his resident deductor is therefore put to genuine hardshipas he 0ould not be able to recoer the amount deducted and deposited.

$s no income accrued to N.3. the amount deposited to the credit ofgoernment cannot be said to be ta. -herefore it has been decided that thisamount should be refunded after approal of CCI- or D,I- to the deductor.

 No interest under section 77$ is admissible on such refund.

$% may after giing intimation ad@ust it against any eisting ta liability ofdeductor.

3efund should be granted after obtaining and undertaking that no certificateunder section 6" has been issued to N.3.

-he claim of refund shall be made 0ithin years from the end of financialyear in 0hich the ta is deducted at source.

 Note C6RC7LAR N8. 22*11 [F.N8. $5252*1*)6/;B)2*11 !' &o" a00l!ale "o /=S u' 195

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Circ,'%r No. 3?

C!rular No. %2 o( $*"#  8"oer, 1995 ;1995< 21? 6/R

;S".< 1>1, C!rular No. %$> da"ed 2> "#  Ja&uar+, 199?

;199?< 21% 6/R ;S".< %> a&d C!rular No. %? o( 2***

;2***< 2>1 6/R ;S".

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Circ,'%r No. 3!; 0%(e0 3!r0 :,'; 19+9

no i()0r%n b Circ,'%r No. /39 0%(e0 33-1-39

 

 "

-he deduction of ta at source u/s 1!5 0ould arise if theincome paid to non resident is taable in India.

hen transactions of sale or purchase ( eport or import# are on principal to principal basis. No liability of non resident eportershall arise in India and resident importer shall not be treated asagent of the eporter.

$ foreign agent of Indian eporter operates in his o0n countryand no part of his income arises in India Esually hiscommission is directly remitted to him F therefore not receied

 by or on his behalf in India. uch an agent is not liable to IndianIncome -a.

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*ircular (o. %'2 dated 259%%9%&5=) "%&5'$&6 +T>

"t.$%&.4,Transmission *orporation of A.7. 0td. C.

*+T 1%&&&4 2?& +T> '65.

upreme Court has negatied the argument that 0here the entire payment does

not hae character of income there is no need for ta deduction at source -heupreme Court has accepted that section 1!5(1# is clear and unambiguous and

casts an obligation only in respect of the appropriate proportion of chargeable

amount It is open to the assessee 0here he does not approach to the $% for

determination of the appropriate portion either because he himself is fairlycertain of the portion of chargeable income or 0here the $% did not responded

to application G -he upreme court says that the determination by authorities is

a safeguard it follo0s that 0here the person responsible for deduction is fairly

certain he can make his o0n determination.

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 R

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 ISSUES 

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0iability of TD arises only when there is

chargeability u9s =,' 8& of +.T Act, %%.

The Honble upreme *ourt, in the case of E. ;.+ndia Technology *entre "7.$ 0td. v. *+T 123%34?25 +T> ='# "*$,

-eld that the obligation to +ithhold ta is limited tothe appropriate portion of income +hich ischargeable to ta and forms part of the gross s%m

 pa!able to the non*resident.

urther held)that the moment a remittance is made to a nonresident0 obligation to deduct tax at source does notarise9 it arises only ,hen such remittance is a

sum char4eable under %ct i.e. char4eableunder sections 9 * and ).

 ISSUES$$

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• Ciew of the Far. High *ourt in the case of *+Tvs. amsung ;lectronics *o. 0td 123%34 ?23+T> 23& , reversed, wherein it was held asunder)

• as per mandate u/s&()0 every payment madeby a resident payer to a nonresident recipient inrespect of any goods/services supplied by nonresident0 'hich resident payer is ma?ing use of in

running of its business or any other activityindulged in as a part of its business/ professionalactivity0 prima facie bears character of an incomeof recipient and0 therefore0 obligation under

section &() springs up

Contd….

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Codafone +nternational Holdings @.C. v. G+ "@H*$, ?%%+T> =# "@om$

7urcahse of shares of foreign *o. to acuire +ndianassets by one nonresident from another nonresident attracts,ndian tax.

ollowed) The landmark ruling of the Honble upreme*ourt in G+ v. A/adi @achao Andolan 1 233?4 2#? +T>53# 1 that explained the law on the sub-ect in greatdetail.4

 The issue 'hether for purpose of getting relief under double

tax avoidance agreement0 the assessee should sho' that hisincome is assessed in the other country0 even 'here theprovisions of the agreement clearly spell out non liability in thehome country0 is a matter on 'hich there is confusionespecially because the distinction bet'een avoidance andrelief agreement has not been appreciated. ,f the income is not

taxable in the home country but taxable in outside countrythan relief in home countr is not ossible.

Similar contention in

>ichter Holding 0td vs. AD+T "Farnataka High *ourt$! 2=!3?!

23%%,

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 ISSUES 

ervices rendered pursuant to Data 7rocessingervices are not managerial9 consultancy services

"23%%$ %% Taxmann.com &= "AA>, (ew Delhi$ >.> Donnelley +ndia

utsource 7vt. 0td. +n re

 The nature of services underta?en by the GH companypursuant to the data processing services agreement0 under nostretch of imagination0 can be said to be technical0

managerial or consultancy services and therefore0 theconsideration received for such services do not come 'ithinthe purvie' of de5nition of Ifees for technical servicesJ asgiven in *xplanation # to clause ('ii) of section () andhence0 the same are not taxable in ,ndia .

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 ISSUES 

• ABC L"d. 6& re [2**%] 29 6/R >$ ;AAR

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ContdA

Car4o Commu&!"+ &e"or@ ;0

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Contd

A or4a& S"a&le+ Co. 6&"er&a"!o&al L"d., 6& re

[2**5] 2%2 6/R >1? ;AAR<

here the business of the assessee inolesdealing in shares securities the income earnedin traded deriaties 0hich had a small lifethrough brokers and custodians acting in the

ordinary course of business 0ould not be liableto ta in India if such actiity is undertaken bythe non resident 0ithout a permanentestablishment or a fied base in India.

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ees s)%re0 i() non-resi0en( for %ccess (o in(erne( is no(

 fee for (ec)nic%n services>

here an assessee merely proides internet access of certain

 band0idth to its subscribers and the main internet serer

0as located in E$ it 0as held that there is no technical

serice 0ithin the meaning of the definition u/s !(1#(ii#.Conse4uently no need of -D.

*+T v. ;stel *ommunications 7. 0td. "233&$ ?%6+T> %6' "Del$ 107 D++;D @I TH; H(@0;G7>;; *G>T +( 1233&4 ?%3 +T> 2"*$4

 ISSUES 

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 ISSUES 

obili/ation and demobili/ation costsreimbursed to non!resident not liable for TD

Where ,T authorities had accepted that the non

resident recipient is not liable to pay any tax in,ndia0 the assessee payer 'as not liable to deduct TA% u/s &() in respect of mobiliCation 4demobiliCation costs reimbursed by it to the said

nonresident company.Can ord A*J +ndia"7$ 0td. v. *+T "23%3$ ?#

DT> =2'"Del$

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ee &%i0 o,(si0e In0i% for i&%r(in4 0is(%nce e0,c%(ion is no(

c)%r4e%b'e (o (%A 

here a resident assessee collected fees on behalf of a foreigncompany imparting distance education and that the non&resident

had no '8 in India and 0as not liable for ta on its income from

imparting distance education there 0as no re4uirement of

deducting -$ from remittance of the amounts so collected.ederation of +ndian *hambers of *ommerce and+ndustry, re "23%3$ ?23 +T> %2= "AA>$, *+T"+nternational taxation$ v. +llinois ++T "+ndia$ 7. 0td."23%3$ ?2% +T> 5&"Far.$

 ISSUES 

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=C6/ -. Bo'"o& Co&'ul"!&4 Grou0 ;< L"d.[2**?] 2* 6/R;A/

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 >eimbursement of expenses to non!resident 

 No T+% u/s & on reimbursement of actual expenditure tononresident parent company since no element of income.

*airn ;nergy +ndia"7.$ 0td.v. Asstt.*+T "23%3$ 2

+T>"Trib.$ ?6"*hen!Trib.$ CIT vs. D,n'o& Pv(. 8(0. > 1#3 ITR #9! C%'"

CIT vs. In0,s(ri%' En4ineerin4 &ro0,c( Pv(. 8(0. > 33 ITR 11# De'"

 B0er Cons,'(in4 8(0. vs. CIT> 3!+ ITR +# **R"

 BNS In0i% V. Se(. Inc. vs. DCIT> 95 ITD 15 IT*T De'"

Uni(e0 Bo(e's 8(0. vs. ITO > 9! TT: ?33 IT*T De'"

ahindra 8 ahindra 0td. v. Dy. *+T "233&$ ?3 T?5= "um$,

(athpa :hakri :oint Centure v. Asstt. *+T "23%3$ ?5

T %#3 "um!Tri.$

 ISSUES 

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Contd

A Tim3en India ?td. In re 800*:

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• Ai>ay Ship Brea3in4 Corpn. rs. A. CIT 200)=(9 IT" =0) 2SC5@

8reversin4 the order of the onble DC:

 That in vie' of insertion of *xplanation # to sec.(&)(iv)(c)0 assessee 'as not bound to deduct TA%i.r.o usance interest payable outside ,ndia by anunderta?ing engaged in the business of shipbrea?ing as tax 'as deductible only if income 'as to

be assessed in ,ndia.• Eno,er+ #ducation 2India5 2F.5 ?td. 2005 =0(

IT" 0< 2%%"5

No tax is deductible u/s & in respect of activity of

examination fees collected in ,ndia and remitted

 ISSUES 

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Contd..  1Advance ruling 7.(o. %? of %&&' 1%&&54 &=

Taxman %5%9226 +T> =65 "AA> K (ew Delhi$4

N.R., transfers Eong term foreign exchange asset 0

 payer, shall be Authori/ed dealer   responsiblefor remittance or crediting such sum to Non

resident( external ) Account.

-ead oLce of Non resident !o. does not re7uire

to deduct ta+  'here it pays to Non resident

(%upplier of technology)0 'here technology is used

by company in ,ndia.

 17.C. >aghava >eddi v. *+T "%$ == +T> 523

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Contd No T+% 'here payment is made to non resident

foreign company for rendering services to customerlocated outside ,ndia. Hipro ?td v. IT 800=: (== Ta+man (9) 2$a45:

%ec.& applies to those persons0 'ho are treated asnon resident under the ,ncome Tax Act and not thenon resident under the oreign *xchange RegulationAct.

8 S.E. Dutt IT v. %n4lo India >ute $ills Co. ?td.2()*5 == IT" ;;2Cal.5: :oarding0 lodging0 airfare expenses of foreign

technicians held to be part of fees paid for technicalservices 8Cochin "enery ?td. vs. CIT@ IT"

=*9:

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ContdA

S"a&dard /r!um0# o"or Co. L"d. -. C6/ [199$] 2*1 6/R $91

;SC<

here recipient of income accounts income on receipt basis is not

releant for determining the taability of income it must be held in

this case that the credit entry to the account of the assessee in the

 books of the Indian company does amount to its receipt by the

assessee and is accordingly taable and that it is immaterial 0hen it

did actually receie it in the outside country. 

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ContdA

=6/ -. 3CL 6&(o S+'"em L"d. ;2**5< 2%> 6/R 2?1;=el>9;Ker

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ContdA

?iability to deduct is absolute S!"u' or 'oure o(0a+me&" !' &o" a rele-a&" o&'!dera"!o&

Satellite Television %sian "e4ion ?td.

v/s CIT 200;5 )) ITD )(/)) TT- (0*2$um5  The situs of the payment or the source of thepayment is not relevant consideration under %ec.

& of the Act. #mphasis in section ()* is onchar4eability therefore0 if payment is made toa nonresident ,hether it is in India oroutside India or in any manner personma3in4 payment is liable for deductin4 ta+

at source

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ContdA

Lu("#a&'a Car4o 6&d!a& r!-a"e L"d. D. =+. C6/ [2**5] 2%> 6/R ;A/< 2* ;=el

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ContdA

C6/ -. Ru"! a#!&er+ or@' L"d. [2***] 2>$ 6/R >>2 ;ad

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ContdA C6/ -. S#lumer4er Sea Co. 6&. [2**$] 2?> 6/R $$1 ;Cal.<

here the igh Court held that the addition on account of ta borne by the payer

of an amount taable u/s 77 ** could only be confined to 16? of the ta and not

ta on ta. 3ectification to alter the ta to make further addition of ta on ta

0as 0ithout @urisdiction.

Ram Kumar =#a&u@a -. 786 [2**1] 252 6/R 2*5;RaE.

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ContdA

3ead'"ar" Bu'!&e'' Solu"!o&' ;< L"d., 6& re [2**?] 25 6/R

5$* ;AAR<

$ssessee imported packaged business soft0are solutions through

a compact disc accompanied by soft0are license key deliered

 by electronic mail oer the internet the issue 0as 0hether ta is

deductible or not the $$3 in this case has held that the importer

in India can customiHe the soft0are according to the needs ofthe client 0ith the permission of the supplier therefore the

amount 0ould be taable as payment for kno0 ho0.

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 No TDS if ()e &%en( (o % non-resi0en( is no(

(%A%b'e in In0i%>

Millennium Intocom Technologies Ltd. v. ACIT (2009) 309

ITR(AT) 18(el)

Cushm!n !nd "!#e$ield(s) %te. Ltd. in Re (2008) 30& ITR 208

(AAR)

'CIT v. eoge "illi!mson (Ass!m) Ltd. (2008) 30& ITR(AT)

*22(!u)

here soft0are maintenance serices proided by non&

resident assessee from outside India haing no '8 in India

 but another non&resident being its representatie in India& no

-D on payment for repair maintenance serices.

+Ai,ot Authoit- o$ Indi! in Re (2008) 299 ITR 102(AAR) (el)/

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 Misce''%neo,s Iss,es

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 ISSUES- DT**

ponsorship of an event is not royalty 

%ponsorship for popular sports events is often

underta?en 'ith the ob>ect of sales promotion

especially 'hen the title of the tournament itself isin the name of the sponsors and use of thecopyrighted name is a condition for payment. :ut

such condition to ma?e payment cannot be ofroyalty0 so as to re

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 ISSUES- DT**

• a+me&" made + a& 6&d!a& om0a&+ "o a S!&4a0ore

om0a&+ (or 0ro-!d!&4 da"a 0roe''!&4 'er-!e' !' &o"

ro+al"+)Enless there is material to establish that the

circuit/e4uipment through 0hich data processing support is proided by said ingapore company could be accessed

and put to use by the assessee by means of positie acts

consideration paid for data processing serices 0ould not

fall 0ithin category of royalty in clause (ia# of8planation to section !(1#(i#

 23116 11 (%A%nn.co 15 M,. IT*T" ; S(%n0%r0

C)%r(ere0

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 ISSUES- DT**

• Interest on income&ta refund earned by an

$ustralian company haing a '8 in India

is taable under paragraph no. of $rticle11 of Indo&$ustralian D-$$)

 23116 11 (%A%nn.co De')i - IT*T"S

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 ISSUES- DT**

Cu'#ma& Wa@e(!eld ;S< "e., 6& re ;AAR< 21*.

3eferral fee receied by a ingaporean Company (applicant# from an Indian

Company for referring customers to the latter is neither business income nor

royalty nor fee for technical serices and therefore it is taable as business

income in ingapore only a' "#e a00l!a&" #a' &o !& 6&d!a.) no

taability under the proisions of the I- $ct or under the proisions of the

D-$$ . 1!5 is not attracted.

6/8 D. S#r!ram Bear!&4' L"d. ;19%< 1?> 6/R >19 ;Cal<

-he respondant company is not re4uired to deduct -D on any payment to

 N.3. for sale of -rade secrets. As pet +TAA bet'een ,ndia and

GA*0 advertisements receipts by Nonresident are not taxable

in vie' of Article 1 read 'ith article &0 therefore no T+%

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 ISSUES- DT**

%ddl.CIT v. E."amabrahman Sons 2F5 ?td.2()

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 ISSUES- DT**

A./. S.6&d!a . L"d. 6& re [2**?] 2% 6/R >21 ;AAR

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 ISSUES- DT**

here the amount paid is a total contract price inoling

supply of machine from the stage of designing to the

stage of commissioning 0hat is paid is not royalty

though designing inoles technological serices but the

right in such design is not transferred to Indian assessee.

ence it 0as found that it is not a case of royalty

therefore no part of the payment could be treated so as tore4uire ta deduction at source.

[C6/ -. Ne+-el! L!4&!"e Cor0ora"!o& L"d. ;2***< 2>$

6/R >59 ;ad.

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OTBER ISSUES =o'0cres( EA&or(s vs. ITO IT*T M,b%i"

Interest %n Damages Not $ssessable -o -a under D-$$ If No '8

 DCIT v. MRO In0i%" P." 8(0 23116 1 (%A%nn.co 13!De'-IT*T"; 

a+me&" made "o a Ne eala&d om0a&+ (or re&der!&4 l!a!'o&

oord!&a"!&4 'er-!e' ua =NA "e'"!&4 a" 7SA doe' &o" (all !"#!& am!" o(

ro+al"+ F/S

3eld:  Nature of payment made by assessee to Ne0 Oealand company is of

liaisoning and coordinating to ensure that blood samples collected by assessee is

 properly receied at E and reports are receied in time and as per terms fied

 by E 8mbassyF neither of these serices can be termed as serices in nature of

managerial technical or consultancy natureF it is also not proiding serices of

technical or other personnelF therefore it also cannot be said that such serices

fall 0ithin term Pfee for technical serices.B as contemplated by $rticle 1

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contdA

'ayment of professional fees for registration of patent abroad

not liable to -D.

  +Tit!n Industies v. IT (200) 11 T 20 (4!ng.)

'urchase of copyrighted article is to a payment for copyright.

+on!t! In$om!tion Technolog- Ltd. v. Addl. CIT(200) 103 IT

32*(4!ng.)/

'ayment for supply of information regarding *usiness

Information 3eport not liable to -D.

Re un 5 4!dsteet 6s,!n! .A (200&) 22 ITR 99(AAR)/

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 ISSUE 

that assessee deductor u/s & cannot ta?eunilateral decision on chargeability of nonresident payee0 'ithout concurrence of A= u/s

&/1 and if so does0 'ill be assessee indefault u/s # and disallo'ance shall beattracted u/s 3(a)(i).

Del +TAT in Haterew and 7artner 2' T

?=5um +TAT in >70 @*A: :ul 2335

ontrar! 'ie+ in

 Lufthansa !1 I-D 1"" (Del&I-$-#F Del I-$- in $* otels 5 %-

"2=F Mar C in 1== I-3 )7!F 3a@ C in *I *ikaner I-$ 5/662 d I-$- in $K$N-I Leathers Le re orted derabad Ind 7

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OTBER ISSUES 

 D. CIT v. ITC 8(0.2336 ?3 ITD 3!9 7o'. - Trib.".

• 'roisions in the D-$$ clearly oerride the proisions of

the $ct to the etent the proisions are more faourable to

the assessee. -herefore !& a'e a&+ =/AA 0ro-!de' (orloer ra"e ;#!# !&lude' H&!lI ra"e< o( "ae', 'u# a

ra"e !ll 0re-a!l o-er "#e ra"e 0ro-!ded !& "#e A".

 7%r BC in 311 ITD 53+  ;8J$ $pproal has no bearing ontime of -D u/s 1!5(1#

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ContdA

C6/ -. C#o4ule a&d Co. L"d. [199?] 21 6/R $> ;SC<

3ule 115 proides for conersion of transactions epressed in

foreign currency in to India rupee in computation of income. the

upreme court pointed out that 0here the transactions are in India

3upee the rule shall hae no application. *ut 0here the amounts

from foreign buyers are outstanding on last day of $ccounting

Qear the rule has to be applied 0ith reference to such date so thatany other ie0 0ould not accord 0ith the proisions of the rule

Constitutional alidity of 0hich 0as upheld by the upreme Court..

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ContdAWhen the non resident become resident0 he can avail bene5t of section

&-0 that income from foreign exchange asset 'ill continue to en>oy the

same concessional rate of tax even after he become resident till such time0

the asset is either transferred or converted into money.

CIT v. !.F. $athe, 2Decd. 5 800;: 0 IT" 99 2Eer.5:

Word ,nterest for the purpose of section 3(a)(i) has to be understood as

covering every payment0 'hich is in the nature of ,nterest0 even if it 'as

the interest paid to the non resident for delayed payment of purchase price.

%o that tax becomes deductible at source.

8CIT v. Ai>ay ship Brea3in4 Corporation 800=: ;( IT" ((= 2Gu>.5 -.E. Synthetics ?td. A. CIT 2%ssessment5 8())0: (* IT" *90

2Delhi5 B

 T+% 'here amount paid relates to income exempt u/s .

 1Hyderabad +ndustries 0td. v. +T "%&&%$ %66 +T> 5=&"Far.$4

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here an income is taed in both the participant countries the agreement 0ould

 proide for set off of the lesser ta on the doubly taed income in the country of

residence of the assessee. o0eer as per $rticle 5 bet0een India and E..

0here no ta is payable in India the 4uestion of giing credit for ta paid in E

so as to entitle the assessee 0ho is a resident in India for refund in India does not

arise.[JC6/ -. =!4!"al eu!0me&"' 6&d!a L"d. [2**5] 2%% 6/R ;A/< 15 ;uma!

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TB*N7 OU 

C*. S%nF% 7. *4%r%' 

e%i'> %4%r%'.s.c%G4%i'.co Mobi'e No. > 9?11?!#3