The Income Tax Appellate Tribunal, New Delhi, held that the remittance made by the assessee to the foreign subsidiary companies is not taxable in India in the hands of the recipient company and therefore there would be no obligation for the payer i.e. assessee company to deduct tax at source u/s 195 of the Act.
The tribunal found that the AO held originally that the remittances made by the assessee company to its subsidiary companies in different countries would be taxable in the hands of the respective subsidiary companies in India on the ground that the same tantamount to income deemed to accrue or arose in India within the meaning of Section 9 of the Act. Accordingly, the remittances made by the assessee were duly subjected to Income Tax assessment in India in the hands of the subsidiary companies.
The bench noted that the Tribunal in the hands of the subsidiary companies had categorically held that the remittance received by them from Indian company i.e. HCL Technologies Ltd (assessee herein) would not be taxable in India as per the provisions of the Income Tax Act as well as under the Double Taxation Avoidance Agreement (DTAA).
Facts
The assessee is a Public Limited company engaged in the business of providing IT/ ITES Services. The assessee is engaged in 3 lines of businesses i.e. software services, infrastructure services and business processing outsourcing (BPO).
The case of the assessee was taken up for verification on the basis of information received from systems for verification of Form 15CA/ 15CB with respect of various remittances made to different subsidiary companies in different countries without deduction of tax at source u/s 195 of the Act.
Ultimately an assessment was framed u/s 201(1)/ 201(1A) of the Act for all the assessment years by the AO treating the assessee as “assessee in default” on the ground that the remittances made by the assessee to various subsidiary companies in different countries would be liable for deduction of tax at source in India. Since the said remittances were made without deduction of tax at source by the assessee, the AO treated the assessee as “assessee in default” and hence tax was sought to be collected from the assessee u/s 201(1) of the Act and consequentially interest u/s 201(1A) of the Act and accordingly orders u/s 201(1) / 201(1A) of the Act stood passed for each of the abovementioned assessment years in the name of the assessee company.
Conclusion
The tribunal relied on the judgment in Re: (IV)Taxability under the DTAAs – No findings returned in which the Tribunal held that since receipts of the foreign AEs from the Assessee are held to be not taxable in India under the provisions of the Act, the grounds raised qua taxability of the impugned receipts under the DTAAs were rendered academic in nature, no findings were returned and the same were left open for determination.
The bench did not find any infirmity in the order of the CIT(A) for each of the assessment year under consideration.
Case Details
Case Name: Income Tax Officer v/s HCL Technologies Ltd
Citation: ITA Nos. 1372 to 1377/Del/2024
Tribunal: ITAT New Delhi
Coram: Shri Saktijit Dey, Hon’ble Vice President And Shri M. Balaganesh, Accountant Member
