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DATE: | (Date of pronouncement) |
DATE: | January 20, 2014 (Date of publication) |
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FILE: | Click here to view full post with file download link |
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No s. 40(a)(i) TDS disallowance for amounts made taxable due to retrospective amendment. Also, concept of “business connection” u/s 9(1)(i) & “fees for technical services” u/s 9(1)(vii) explained
As regards “fees for technical services”, the payments made to the subsidiaries may be construed as “fees for technical services”. However this is only due to the retrospective amendment by Finance Act 2010. Prior to that, Ishikawajima-Harima Heavy Industries 288 ITR 408 (SC) had held that s. 9(1)(vii) could be invoked only where the services were rendered in India and utilized in India. At the time of the payment Ishikawajima-Harima was the law of the land and the assessee was of the bona fide belief that TDS was not necessary on the said payments of fees for technical services. S. 40(a)(i) cannot apply to disallow payments which become taxable subsequently due to a retrospective legislation. Further, some of the payments do not satisfy the “make available” test in the DTAA as held in De Beers India Minerals
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