Taxation- TDS Obligation - Assessee made remittance to non - resident company without deducting TDS - AO considering it "fees for technical services" held him liable as assessee in default for not deducting TDS - CIT reversed assessment order - Hence present Appeal - Whether assessee responsible for making payment to a non-resident was liable to deduct tax at source under Section 195 (1) if he did not apply to the AO under Section 195 (2) for permission to remit without deduction at source?- Section 195, Income Tax Act, 1961.
ITO v. M/s Prasad Production (ITAT Chennai) (Decided on 09.04.2010) MANU/IX/0003/2010
Held, if the assessee has not applied to the AO under Section 195(2) for deduction of tax at a lower or nil rate of tax under bona-fide belief that no part of the payment made to the non-resident is chargeable to tax, then he is not under any statutory obligation to deduct tax at source on any part of the payment.
From the facts of the case it is clear that the AO has mistaken the payment made for services provided by the non- resident company to be payment of technology transfer whereas they are auxiliary to the sale of the equipment. Hence appeal by Revenue dismissed.
