Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: empanelment :: Central Excise rule to resale the machines to a new company :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: cpt :: due date for vat payment :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: VAT Audit :: list of goods taxed at 4%
 
 
From the Courts »
  Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 CIT vs. Greenfield Hotels & Estates Pvt. Ltd (Bombay High Court)
 IndiaBulls Financial Services Ltd vs. DCIT (Delhi High Court)
 Maharao Bhim Singh of Kota vs. CIT (Supreme Court)
 Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
 Jaiprakash Associates Ltd. Vs. Commissioner Of Income Tax
 Formula One World Championship Limited Vs. Commissioner Of Income Tax, International Taxation-3 And Anr.
 Commissioner Of Income Tax International Taxation-3 Delhi Vs. Formula One World Championship Ltd. And Anr.
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)

BIOCON Biopharmaceuticals Pvt. Ltd vs. ITO (ITAT Bangalore)
July, 30th 2013

S. 195(2) TDS: AO has no power to issue Nil TDS certificate

The assessee entered into a Joint Venture agreement with CIMAB SA, Cuba, to set up a JVC in India. It was agreed that CIMAB would provide technology to the JVC in consideration for which it would be allotted 49% of the equity capital of the JVC. The assessee filed an application u/s 195(2) claiming that the technology was not chargeable to tax in India and that the shares should be permitted to be allotted without TDS. The AO passed an order u/s 195(2) in which he accepted the assessee’s contention that no TDS was required to be deducted on the allotment of shares. However, later the AO took the view that the allotment of shares in consideration of the technology transfer was chargeable to tax and that the assessee was in default u/s 195 & 201. This was upheld by the CIT(A). Before the Tribunal the following issues arose: (i) whether u/s 195(2) the AO has the jurisdiction to issue a certificate that no tax need be deducted at source, (ii) whether s. 195(1) applies where payment is made in kind and not in money terms & (iii) whether the consideration (in the form of shares) for technology transfer can be said to be “transfer of a capital asset” outside India so as to be exempt from tax? HELD by the Tribunal:

(i) S. 195(2) presupposes that the person responsible for making the payment to a non-resident is in no doubt that tax is payable in respect of the some part of the amount to be remitted to a non-resident, but is not sure as to what should be portion so taxable or is not sure as to the amount of tax to be deducted. Consequently, in an application made u/s 195(2), the AO cannot assume jurisdiction to hold that the entire payment is not chargeable to tax and the payer need not deduct tax at source. As the AO had no power u/s 195(2) to hold that no tax is deductible at source, the order passed by him holding that no tax is deductible at source on the technology transfers is non est in law. As there is no estoppel against the law, the assessee cannot take advantage of such an order (GE India Technology Centre 327 ITR 456 (SC) referred)

(ii) The argument that s. 195(1) does not apply to a case where shares are allotted is not acceptable because the expression “any other sum chargeable under the provisions of the Act” in s. 195(1) has to be read in conjunction with the words “at the time of credit of such income …. in cash … or by any other mode”. Thus payment in terms of the money is not the only mode contemplated u/s 195(1) of the Act. The use of the expression “or by any other mode” makes the intention of the legislature clear that s. 195(1) applies even to cases where payment is made otherwise than by money.

(iii) The definition of “royalty” in Explanation 2 to s. 9(1)(vi) excludes consideration which would be income of the recipient chargeable under the head ‘capital gains’. For application of the above exclusion clause, it is necessary that (a) technical know-how should be a capital asset in the hands of CIMAB, (b) the said technical know-how should be capable of being transferred and should have been transferred by CIMAB, (c) the machinery provisions viz., the computation of capital gain as given in s. 48 should be capable of being applied & (d) the transfer of technical know-how should have taken place outside India. On facts, the assessee has not shown that the transfer of technical know-how took place outside India. Further, the terms make it clear that there was no transfer of the know-how by CIMAB to the assessee but the assessee had a mere right to use the know-how, though the nomenclature used in the Agreement is ‘transfer of technology’. Consequently, the consideration for the know-how constitutes “Royalty” under Explanation 2(iv) to s. 9(1)(vi).

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Publishing Management System PMS News Management System Publishing Management System Development Online News Management System for media company custom Publishing management system development Survey management system Market Res

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions