In a major relief to IBM India, the Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the Company need not required to TDS on payment to IBM Philippines for rendering of payroll related services.
Earlier, the DRP has held the payment of Rs.9,45,16,809/- made to M/s IBM Philippines treating the same as “Fee for technical services” not subject to TDS. The Revenue filed an appeal before the Tribunal.
Shri N.V. Vasudevan, Vice President and Shri B.R. Baskaran, Accountant Member found that earlier, the Tribunal, regarding the payments were made to the above said AE towards rendering payroll related services, has held that the payments made to IBM Philippines is not liable to TDS.
“Accordingly, following the above said decision rendered by ITAT in the assessee’s own case, has directed the AO to delete the disallowance,” the Tribunal said.
Allowing relief to the assessee, the Tribunal held that “the contention of the revenue in its ground of appeal is that the above said decision rendered by the ITAT has not reached finality. However, since the Ld DRP has followed the decision rendered by the Tribunal in respect of very same issue in the proceeding initiated u/s 201 of the Act and held that the payments made to IBM Philippines is not liable to TDS in the assessee’s own case for the current year, we have no other option but to confirm the decision rendered by Ld DRP. Accordingly, we dismiss this ground of revenue.”
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