Tribunal held that the expenditure had been incurred by the assessee in pursuance of a maintenance contract. The payment made towards annual maintenance contracts would fall under the category of works contract. The payment given by the assessee would constitute business receipts in the hands of the recipient and it was not taxable in India as the recipient has not permanent establishment in India. Hence, the assessee was not required to deduct TDS under S. 195 of the Act, as no part of the amount is chargeable in India in the hands of recipient. The expenditure is allowable. (AY. 2012-13)
DHL Air Limited v. Dy. CIT(IT) (2018) 63 ITR 149 (Mum.)(Trib.)
S. 40(a)(i) : Amounts not deductible – Deduction at source – Expenses on maintenance of aircraft contract to foreign company – payments business receipts not taxable in India – Not liable to deduct tax at source. [ S.195 ]