The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that no Tax Deducted at Source (TDS) shall be deducted on fee paid by Hindustan Aeronautics to CGTM France for availing flight test services.
The assessee company, Hindustan Aeronautics Limited (HAL) who is engaged in the business of design and development of engines of flights & helicopters entered into an agreement with Turbomeca for designing Dhurve/Shakti engine. The Shakti engine was co-developed by Turbomeca (company based at France) and HAL and the assistance for conducting flight tests were provided by CGTM, France a subsidiary of Turbomeca.
On verification, it was noticed that the assessee company, HAL had made the payments to CGTM, France for providing technical assistance for Shakti Air Flight Test without deduction of tax at source for availing the technical assistance.
As per the provisions of Sec.195 of the Income-tax Act,1961, any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the Act (not being the income chargeable under the head salaries) shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.
Siddhesh Chougule,appeared on behalf of the assessee submitted that the assessee was not liable for deduction of TDS under Section 195 of the Act and the same issue had been decided in favour of the assessee in assessment year 2009-10
Sankar Ganesh K, appeared on behalf of the revenue.
The Division Bench of Chandra Poojari, (Accountant Member) and George George K., (Judicial Member) allowed the appeal observing that,
“The Tribunal has already held that there was no question of deduction of TDS on the payment made to CGTM, France for the service rendered by them to the assessee and the payment made to them does not fall under the “fees for technical service.” Hence, it does not attract the provisions of section 195 of the Act so as to deduct TDS.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
