The Supreme Court of India issued notice on application seeking condonation of delay in the ruling regarding the non-applicability of TDS deduction for payments received by IBM Philippines.
The Karnataka High Court noted that “Admittedly, there is no permanent establishment of IBM Philippines in India. As per Article 23 of DTAA, the business profit of IBM Philippines shall be taxable in that State only. Further, the CIT(A) has also held that the transactions between the assessee and IBM Philippines were in the course of its business and the same has not been disputed by the Revenue.”
It was further observed that “Hence, the payments received by IBM Philippines shall not be liable for TDS under Section 195 of the Income Tax Act. Therefore, assessee cannot be deemed as an ‘assessee in default’.”
The special leave petition (SLP) arose out of impugned final judgment and order dated 16-01-2023 in ITA No. 218/2014 passed by the High Court of Karnataka at Bengaluru.
A Two-Judge Bench comprising Justice BV Nagarathna and Justice Manoj Misra observed that “Issue notice on the application seeking condonation of delay in filing special leave petition as well as special leave petition.”
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