Dismissing the appeal of the revenue the Court held that ; Explanation 2 to s. 195(1) inserted by Finance Act 2012 with retrospective effect from 01.04.1962 has bearing while ascertaining payments made to non-residents is taxable under the Act or not. However, it does not change the fundamental principle that there is an obligation to deduct TDS only if the sum is chargeable to tax under the Act. If the conclusion is arrived that such payment does not entail tax liability of the payee under the Act, s. 195(1) does not apply. Relied G.E. India Technology Centre P. Ltd v. CIT ( 2010) 327 ITR 456 ( SC) . ( TA No. 290 of 2018, dt. 09.04.2018)
PCIT v. Nova Technocast Pvt. Ltd ( 2018) 166 DTR 426/ 304 CTR 670(Guj)(HC) , www.itatonline.org
S. 40(a)(ia) : Amounts not deductible – Deduction at source -Non-resident –Commission- Obligation to deduct tax at source arises only if the sum is chargeable to tax in India , even after insertion of Explanation 2 to S.195(1) by Finance Act 2012 with retrospective effect from 01.04.1962