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Select Posers (RRC-Goa of Baroda Branch of WIRC-ICAI)
By Kapil Goel Adv. (FCA LLB) 9910272806
Advocatekapilgoel@gmail.com
1.
Whether disallowance u/s 40(a)(i)/40(a)(ia) automatically
exclude the invocation of section 201 proceedings (for payer in
default) That is whether disallowance of expense and its
treatment as assessee’s income exclude operation of section
201 of the Act?
2.
Whether AO’s acceptance of assessee’s explanation that
NO tds was required on a expense during completed scrutiny
proceedings (hence no disallowance u/s 143(3) order) has any
impact to rule out applicability of section 201 of the Act?
3.
Whether CIT-A can set aside proceedings u/s 201 of the
Act despite amendment in section 251 of the Act? That is
whether proceedings u/s 201 of the Act are different from
assessment proceedings?
4.
Whether on genuine reversal of transaction (credit entry)
there can be any possible/potential TDS liability in hands of
person who has first credited the amount and then reversed
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the said entry due to genuine reasons (like wrong punching at
first instance?)
5.
Whether onus u/s201(1) is on revenue to prove that they
are not able to recover the tax from payee before approaching
payer for TDS demands?
6. Whether penalty u/s 271C (or section 221) of the Act can be
imposed for delayed payment of TDS specially where during TDS
survey assessee suo motto accepted stated default and paid
necessary amounts immediately after TDS survey?
7. In respect of the personnel expenses. assessee and S Limited
recognized that they would require certain common human resources.
Assessee agreed that instead of these individuals being duly
employed, S Limited would employ them. However, the services of
these employees would be availed by both the entities on need basis
and costs expenses in respect of these employees (including
salary,incentives based on terms of appointment, mobile phone
expenses) were initially disbursed by S Limited after deducting
appropriate taxes. However, to the extent that these persons
rendered services to it. ASSESSEE have reimbursed the costs to S
Limited at actuals (cost to company basis) without any mark-up. S
Limited did not make available, supply or furnish the services of
these personnel to us. While working with us, the employees were
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working under the direct supervision and control for their work and
the intention of S Limited was never to provide any services to us.
Whether revenue can insist assessee deduct TDS u/s 194J on
payment to S Limited?
8. With respect to the contract work receipts, TDS was done but
the assessee claimed credit of the tax mentioned in the said TDS
certificates , the assessing officer , in the assessment orders of both
the firm and the company, refused to give credit on the ground that
some of the TDS certificates belong to the joint venture and some
other TDS certificates are in the name of Directors and do not relate
to the assessee firm/company. Aggrieved thereby, the present
appeals under Section 260-A of the Income Tax Act, 1961 have
been filed contending:
a)
that the credit for TDS given on the TDS
certificates produced in the names of the Joint Venture is not
in accordance with Rule 37-B A of the Rules framed under the
I.T. Act.
b)
The assessee is not eligible for TDS credit on the
certificates produced in the names of the Directors when the
same is not in accordance with Rule 37-B A of the above Rules
Whether revenue is right?
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9.
Whether an application under section 195(2) to Assessing
officer (TDS) can be made where payer believes no amount (nil
amount) is chargeable to tax in hands of non resident
recipient?
10. Whether issuance of equity shares as a consideration for
royalty/fees for technical services constitute income u/s 5
read with section 9 of the Act in hands of non resident
recipient so as to attract tax withholding u/s 195 of the Act?
11. Whether after amendment to income tax act in section 9
by Finance act 2010 (vide explanation thereto), under
DTAA/tax treaty also, the test of place of rendition and
performance of service has lost its total significance?
12.Whether payment of salary to non resident employee
working abroad and receiving salary abroad, albeit working for
benefit of Indian company, can be charged to tax u/s 5(2) read
with section 9(1)(ii) of the Act?
13.Whether payment of product registration expenses to
overseas autonomous organization for enabling exports/sale in
that country constitute taxable income u/s 9 of the Act?
14. Whether mere constitution of permanent
establishment/PE under DTAA is sufficient for total taxation
to activities unrelated to Indian PE of foreign entity?
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15. Whether in a case where there is no taxability in hands of
foreign company under the act and or DTAA, is there any
requirement to file ROI u/s 139(1) of the Act?
16. Whether for purposes of TDS u/s 195 of the Act, professional
service rendered by foreign professional (independent
person/individual) say from Hongkong (where no DTAA is
there) are these services different from technical services for
purposes of taxation u/s 9(1)(i) of the Act so as to be taxed on
basis of professional connection in India?
a. Whether for purposes of TDS u/s 195 of the Act, where
DTAA benefit is given by payer to payee at TDS stage, Tax
residency certificate under rule 21AB is must (section
90(4) of the Act?
b. Whether for purposes of TDS u/s 195 of the Act, for
purposes of taxation u/s 9(1) of the Act, what shall be
the treatment of following services:
a) Procurement assistance services ; referral fees; commission
for procurement of orders;
b) assembly, disassembly, inspection, reporting and evaluation
of plant & machinery;
c) Lab testing; Training to experts (like pilots);
d) Arbitration fees paid to overseas business chamber
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c. Whether for payment to Non resident seller of immovable
property for which capital gains is taxable in India (as
property is in India) can seller take into consideration
cost and indexation factors in hands of seller for
computation of requisite TDS u/s 195 of the Act without
approaching AO u/s 195(2) of the Act?
d. Whether for approaching CIT u/s 248 for declaration of
TDS it is must that there is first hand adjudication by AO
u/s 195 of the Act or straightway a payer can go to CIT
u/s 248 on fulfillment of given conditions?
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Some Case Studies
1. During the applicant had produced the reality show’ (‘the show’). As per
the format of the show the shooting was to take place outside India
(primarily in Argentina). For the purpose of show the programme outside
India the applicant has engaged XYZ Argentina for providing line production
services in Argentina and for that purpose an agreement in the form of
DEAL MEMO for production services agreement was entered into. XYZ
Argentina is a company incorporated in Argentina and is a tax resident of
Argentina. The applicant makes payment to XYZ Argentina for the line
production services rendered in Argentina.
questions:i) Whether the payments made by the Applicant towards line production
services provided by XYZ Argentina in accordance with the agreement
entered into with the Applicant is in the nature of Fees for Technical services
(‘FTS’) within the meaning of the term in Explanation 2 to clause (vii) of
section 9(1) of the Act?
ii) Whether the payments made by the Applicant to in XYZ Argentina
respect of provision of equipment and services are in the nature of
‘Royalty’ within the meaning of the term in Explanation 2 to clause (vi)
of section 9(1) of the Act?
iii) If the answer to Question (i) or (ii) is not in the affirmative, whether
the payments made by the Applicant to XYZ Argentina for availing the
line production services under the terms of the Agreement would be
charged to tax as per the provisions of section 9(1)(i) of the Act?
iv) Based on the above, would the receipts by XYZ Argentina from the
Applicant suffer withholding tax under section 195 of the Act, and at what
rate?
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2. A company in surat engaged in business of diamond trading
etc enters into an agreement with a manufacturer of machine
at China for installation of a machine to be used for diamond
assorting at surat. Two types of payment are made: i) one
upfront lumpsum payment (non refundable at the time of
machine installation) ii) payment on basis of no. of diamonds
being assorted (per piece payment) ; What shall be taxability of
the both?
3. An event management company in Delhi organizing a big show
involving number of German delegates in Delhi, enters into an
agreement with German company who will arrange a team of
German chef (4-5 people) who will come to india and
supervise/observe the quality of food in event at Delhi (that is
it is accordance with german standards). Now payment for
such services are made by Indian event management company
to German Company, what shall be the taxability of the same?
4. A French company (FCO) engaged in providing technical
services enters into a contract with Indian co. (ICO) for
supervision of its plant construction in india. FCo requires
engineers for this contract/job. FCO enters into further
contract with a US Company (USCo) whose business is to
arrange technicians from globe and provide the same to
companies who require them. USCo sends technicians to FCO
and FCO uses their services in India for execution of its
contract with ICo. Now Payment made by ICo to FCo is taxable
in India for stated contract for which FCo is paying due taxes
as per Indian laws. Technicians working with FCo are its
employees working on Indian contract. Payment made by FCo
to USCo comprises for sending /recommending/arranging or
stage managing the technicians. Whether it is fees for
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technical services u/s 9(1)(vii) of the Act and if it is business
income whether technicians working in india with FCo can
constitute business connection/PE of USCo in India?
5.
The assessee before us is engaged in the business of manufacturing and trading of
tooth powder, tooth paste, tooth brush and other health care products.
. The assessee had made the payment of Rs 11,71,826 to British Dental Health
Association(BHDF) towards accreditation panel fees. BDHF is a UK based
registered charitable institution. This Foundation is stated to, inter alia, "evaluate
consumer oral health care products to ensure that manufacturers' product claims
are clinically proven and not exaggerated" and "an independent panel of
internationally recognised dental experts" is stated to "study all the claims
carefully to make sure they are true, and backed up by reliable scientific
evidence". As a result of the accreditation granted by the BDHF, the assessee is
allowed to use this fact of BDHF approval in the marketing of its products. The
question that we actually need to decide is whether the amount so received by
BDHF, in consideration of the accreditation, can be brought to tax in India?
6. An assessee in India engaged in textile business availed the
services of a fashion designer who working at abroad and
sends to Indian company recent fashion trends. The fashion
designer is of Ukraine and Thailand. Comment on the
taxability of the same under the Act and DTAA.
7. An assessee calls an engineer from Singapore to repair the
machinery in India for 5-10 days. The engineer claims two
payments one reimbursement of travel; boarding and lodging
and second repair charges for his very short professional visit.
Comment on the taxability of the same under the Act and
DTAA.
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8. Whether payment for advertising in foreign media and
payment to Google and yahoo for online advertisement are
chargeable to tax in India.
9. Whether for purposes of section 194J and section 194C,
payment of AMC (annual maintenance charges) for computer
repairs; attending seminars; lab testing shall fall under section
194C or section 194J?
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