In the recent budget retrospective amendments are made in section 9, 195 etc. thereby requiring deduction of tax at source on certain payments on account of software whether as license or purchase or by download, payment for satellite transmission or any right, property or information etc.
In a recent decision in the case of ITO v. Bovis Lend Lease (India) (P) Ltd. (2012) 21taxmann.com 100 the assessee’s contention had been that what it paid to non-resident was only reimbursement of costs and submitted a CA certificate too. The ITAT held that reimbursement of expenses in this case relate to fee for technical services hence section 195 was applicable. The ITAT however concluded that since the services had been provided offshore, TDS provisions were not applicable. Later the revenue’s argument in MA had been that such reimbursements have become taxable with the change in the Explanation to section 9(2) of the Act in the Finance Act, 2010 with effect from 1-6-1976 irrespective of the place of rendering of service.
In rejecting the MA of the revenue the ITAT viz a viz period prior to such new law held that the deductor will not have any liability to tax for non deduction of TAS on the basis of the Nagpur bench decision of Tribunal in the case of Canara Bank v. ITO [2009] 121 ITD 1. The bench therein held that a retrospective amendment can validly impose tax on the recipient of income. It had cannot, however, fasten a liability on the deductor from a back date. The Tribunal had observed that merely for the reason that the law had changed retrospectively, the assessees could not be treated in default for non fault of their own. The other reason for rejection has been the fact that the revenue had gone to the High Court in this case which was pending.
Those assesses who may not have deducted tax viz a viz payments described in such retrospective provisions may escape tax liability on the basis of these decisions
In a recent decision in the case of ITO v. Bovis Lend Lease (India) (P) Ltd. (2012) 21taxmann.com 100 the assessee’s contention had been that what it paid to non-resident was only reimbursement of costs and submitted a CA certificate too. The ITAT held that reimbursement of expenses in this case relate to fee for technical services hence section 195 was applicable. The ITAT however concluded that since the services had been provided offshore, TDS provisions were not applicable. Later the revenue’s argument in MA had been that such reimbursements have become taxable with the change in the Explanation to section 9(2) of the Act in the Finance Act, 2010 with effect from 1-6-1976 irrespective of the place of rendering of service.
In rejecting the MA of the revenue the ITAT viz a viz period prior to such new law held that the deductor will not have any liability to tax for non deduction of TAS on the basis of the Nagpur bench decision of Tribunal in the case of Canara Bank v. ITO [2009] 121 ITD 1. The bench therein held that a retrospective amendment can validly impose tax on the recipient of income. It had cannot, however, fasten a liability on the deductor from a back date. The Tribunal had observed that merely for the reason that the law had changed retrospectively, the assessees could not be treated in default for non fault of their own. The other reason for rejection has been the fact that the revenue had gone to the High Court in this case which was pending.
Those assesses who may not have deducted tax viz a viz payments described in such retrospective provisions may escape tax liability on the basis of these decisions
1 comment:
Sir,
I am an unmarried senior citizen owning some shops. I want to leave my property in a private trust, and the income earned by the trust will be given on basis of need [like health and education fees] to my brothers children and their children, and so on for generations.
Is it advisable to form a private trust for this matter, and will the trust endure for generations?
Thanking You,
N Shivam
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