icai-mumbai- 18th july09 deduction of tds us195.pdf

8/14/2019 icai-mumbai- 18th july09 deduction of tds us195.pdf

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18/07/2009 2WIRC OF ICAI


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How this Section is differentfrom other TDS provisions ?

By SUSHIL LAKHANIWIRC OF ICAI


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Snapshot of the Section

Sec. 195(1)- Scope & condition !o" #pp$ic#%i$it

Sec. 195(2) - App$ic#tion % payer to A'O' !o" $o(e"

ded)ction o! t#*

Sec. 195(3 & 4)- App$ic#tion % payeeto A'O' !o" $o(e"

ded)ction o! T#*

Sec. 195(5)- +o(e" to C,DT to #.e R)$e

18/07/2009 5BY SUSHIL LAKHANIWIRC OF ICAI


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Section 195/10 Scope & Condition

Wide Scope o! t2e ection

Condition !o" #pp$ic#tion o! Section 195

#0#n pe"on4 - Inc$)de # pe"on 2#in6 no t#*#%$eincoe

%0 # non-"eident4 - Inc$)de NRI

- doe not inc$)de R %)t NOR

c0 ) c2#"6e#%$e to t#* /ot2e" t2#n S#$#"ie04

BY SUSHIL LAKHANIWIRC OF ICAI


7/6118/07/2009 7BY SUSHIL LAKHANIWIRC OF ICAI


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Section 195(2) : Appication !" #a"e$ to AO fo$ o%e$

e'ction of ta:

Di!!e"ence %et(een Section 195/70 & Section 198

Fo" !o" t2i #pp$ic#tion

:Appe#$ #6#int o"de" );' 195/70

/Section 7 d# o! p#ent o! t#*'

On$ i! t2e p#e" %e#" t2e t#* $i#%i$it & not o! "eceie"%e#" t2e t#*

Re!)nd to ded)cto" o! t#* ded)cted /Ci"c)$#" 89>0:Reiion poi%$e ); 7?3 #6#int o"de" );' 195/70

/,CCI V' DIT /9? ITD 7?30



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Section 195/30 App$ic#tion % p#ee !o" $o(e" ded)ction o! t#*

:R)$e 79,/70 @ condition

:Ce"ti!ic#te4 % AO'

:ConeB)ence o! non ; 2o"t ded)ction o! TDS

:Di#$$o(#nce );' /#0/i0 o" Section 5=/10/#0/ii0

:C#n dep"ec#tion %e di#$$o(ed i! TDS on c#pit#$ e*pendit)"e not

ded)cted /3 SOT 89= /7>>500

:I! t2e Indi#n Co' 2# not ded)cted t2e T#* #t o)"ce ); 195C#n t2edept p"oceed to "ecoe" t2e t#* !"o %ot2' i'e' Indi#n +#"t #nd

Fo"ei6n p#"t' /E*p$#n#tion to Sec' 191 "'(' Section 7>50



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Inte"et );' 7>1/1A0

C#nnot %e $eied i! "ecipient 2# p#id !)$$ t#* /79? ITR 77?

/SC00

+en#$tie - /Section 221 Section 2*1C0/Re!e"Hind)t#n Coc# Co$# /793 ITR 77? /SC00

+"oec)tion - /Section 2*+ ,0



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18/07/2009 15,- SS/I0 0A/AIWIRC OF ICAI

SCO+E OF INCOE OF A

NON-RESIDENT


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1' ,)ine +"o!it T#*#%$e i! ,)ine Connection in Indi# o"p"ope"t o" #et o" o)"ce in Indi# o" t"!'

o! # c#pit#$ #et it)#ted in Indi#'7' S#$#"ie T#*#%$e i! e"ice #"e "ende"ed in Indi#

Section 9/10/ii0/Re!e" E$i Gi$$ /SC00

3' Diidend T#*#%$e i! p#id % #n Indi#n Cop#nSection 9/10/i0- /At p"eent e*ept0


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18/07/2009 17WIRC OF ICAI BY SUSHIL LAKHANI


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31/05/2008 1818BY SUSHIL LAKHANI

('e'!'1t)$ 7>>9 CA Ce"ti!ic#te to %e o%t#ined in Fo"

No' 15C,

Fo" 15CA to %e !)"ni2ed

e$ect"onic#$$ % t2e #eee

WIRC OF ICAI


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CERTIFICATE ,J A CA FOR REITTANCE

Soe I)e

ConeB)ence o! di!!e"ence o! opinion %et(een # CA #nd AO

ConeB)ence o! c2#n6e in t2e ie( d)e to #n #endent o" #

K)dici#$ deciion o" ci"c)$#" )%eB)ent to i)e o! ce"ti!ic#te'

Dete"in#tion o! #n peci#$ "e$#tion4 %et(een p#e" #nd p#ee'

T#* "eidenc ce"ti!ic#te @ i! not ##i$#%$e

T#* "eidenc ce"ti!ic#teLnot )!!icient -- d)#$ "eidenc

V#$idit pe"iod o! t#* "eidenc ce"ti!ic#te ; )nde"t#.in6 ;

dec$#"#tion !"o t2e p#ee @ !o" # e#" o" !o" in6$e p#ent



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Soe I)e /ContM0

W2et2e" CA ce"ti!ic#te i #n #$te"n#tie to

O"de" ); 195/70 Non "eident4 t#t) o! t2e "eceie" @ #t (2#t

point o! tie to %e conide"ed: #t t2e tie o! i6nin6 o! #6"eeent o": t2e p"io" !in#nci#$ e#" o": #.in6 o! "eitt#nce

In #%ence o! #dd"e in t2e #6"eeent i t2ep#e" o%$i6ed to dete"ine t2e t#t) o!

p)"c2#e" !o" p)"c2#e o! c#pit#$ 6#in



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R,I Ci"c)$#" No' A+ /DIR0 Se"ieCi"c)$#" No' >3 d#ted 19t2)$

7>>8

Ho(ee" (it2d"#(n t2"o)62

R,I $ette"



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,)ine /Connection0 Receipt o! # non-"eident

T#*#%i$it )nde" t2e Act U; 9/10/i0

: T#*#%i$it i! %)ine connection4 e*it o" i! #et o" o)"ce in

Indi#'/Vod#!one /,o0/HC0 & E-T"#de #)"iti) /,o0 /HC00

: Speci!ic e*c$)ion @ E*p$#n#tion 1/%0 1/c0 & 1/d0 o! Section

9/10/i0



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,USINESS INCOE /o! NR0 /ContM0

Section 9/10/i0 - /ContM''0

Speci!ic inc$)ion@ E*p$#n#tion 7 to Section 9/10/i0:T"e#t concept o! dependent #6entint"od)ced in Act:A6ent need not %e in Indi# %)t )t Actin Indi#'

:,)ine Connection4 @ Inte"p"et#tion o!:CIT V' R'D' A66#"(#$ & Co' /5? ITR 7>0:Ci"c)$#" 73 o! 19?9 & Ci"c)$#" 8=? /Coiion on e*po"t - 175 ITR 575

7?8 ITR 8750 /Cont"oe"i#$ ie( /78= ITR 980/781 ITR 1930/AAR00

:F$o othe$ 'icia $'ins:e*itence o! oe o"6#ni#tion in Indi# /773 ITR = ITR

=81/AAR00:A6enc in Indi# /739 ITR =89 3? ITR ITR ==8 7?= ITR 15? /AAR0etc0

/Note E*p$#n#tion 7 no( int"od)ced to Section 9/10/i00

/"e!e" Speci#$it #6#ine /78< ITR 31> /AAR00



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,)ine Connection4 Inte"p"et#tion o!

F"o ot2e" K)dici#$ ")$in6 /ContM0

:C$oe "e$#tion2ip in Indi# - /119 ITR 9=?0:Ai##t c#e /=5 ITD


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SC o!se$6ation $ea$in incoe a$isin f$o !'sinessconnection 7 (288 IR 48 (SC))

A$t2o)62 ection 9 o! t2e Act "#ie # $e6#$ !iction it )t%e cont")ed 2#in6 "e6#"d to t2e o%Kect it ee. to#c2iee /#")ti Udo6 V' R#$#$ /7 SCC ?3= !o$$o(ed0

T2e"e i # ditinction %et(een e*itence o! # %)ine

connection #nd incoe #cc")in6 o" #"iin6 !"o )c2%)ine connection



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,USINESS INCOE /o! NR0 /ContM0SC o%e"#tion "e6#"din6 incoe #"iin6 !"o %)ine connection

@ /7== ITR = /SC00/contdM0

e"e e*itence o! # %)ine connection # not "e)$t in

incoe #cc")in6 o" #"iin6 in Indi#E*itence o! # +e"#nent Et#%$i2ent doe not nece#"i$

e#n e*itence o! %)ine connection

W2e"e ee"#%$e p#"t o! # copoite cont"#ct #"e pe"!o"ed indi!!e"ent K)"idiction t2e p"incip$e o! #ppo"tionent 2o)$d %e

#pp$ied to dete"ine p"o!it t#*#%$e in e#c2 )"idiction'



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,USINESS INCOE /o! NR0/contdM0Sit's of the so'$ce of incoe (SC o!se$6ations (288 IR 48)

T2e o)"ce o! incoe need not %e t2e p$#ce (2e"e incoe

#cc")e o" #"ie /CIT V' A2ed%2#i Ue"%2#i /1= ITR =

ITR 335 /SC0 ITO V' S"i"# ,e#"in6 Gtd' /77< ITR 87< /SC00'



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,USINESS INCOE /o! NR0/ContM0

TURNPEJ CONTRACTS /ContM0

SC O%e"#tion in 7== ITR =/ContM'0

T2e p#ent !o" o!!2o"e )pp$ #nd e"ice (# c$e#"$

de#"c#ted @ c#nnot %e 2e$d to %e # cop$ete cont"#ct t2#t 2# to

"e#d # # (2o$e' /7== ITR =04



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Off;sho$e S'pp": (288 IR 48)

I! tit$e to 6ood p#ed o)tide Indi# & p#ent o)tide Indi# not t#*#%$e'

Si6nin6 in Indi# not "e$e#nt'

+e"!o"in6 o! ce"t#in #ctiitie in Indi# /$o#din6 )n$o#din6 in$#nd t"#npo"t#tion0 not

"e$e#nt'

#a"ents to Fo$ein Aents

Ope"#tion o)tide Indi# / C,DT Ci"c)$#" 73 & 8=?0Not t#*#%$e in Indi# @ /175 ITR5750/7?8 ITR8750

Cont"#" ie( t#.en % AAR in c#e o! W#$$#ce +2#"# /78=ITR 980 & R#Ki #$2ot"# 7=< ITR 5?< /AAR0



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,USINESS INCOE /o! NR0 /ContM0+#ent !o" )pp$ #nd int#$$#tion etc o! eB)ipent /C,DT ci"c)$#" 730

/7


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I)e #"iin6 );' 195 in "epect o! ce"t#in peci!ic

p#ent'Ro#$tie & FTS

Sec' 9/10/i0 & Section 9/10/ii0

+#ent in n#t)"e o! Ro#$t & FTS

T2ee )%-ection oe""ide Sec' 9/10/i0 /1?8 ITR ==


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Ro"aties An FS

Sec. 9(1)(6i) & Section 9(1)(6ii):

+$#ce o! Acc")#$

:Acc")e (2e"e e"ice #"e )ti$ied /SRP/73> ITR 7>?/AAR00

:Acc")e (2e"e t2e p#e" i it)#ted/73= ITR 79?0

:Acc")e (2e"e "i62t to "eceie incoe #"oe /R#Ki #$2ot"# 7=< ITR 5?


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Royalty / FTS income is taxable in India if service is used / utilised in IndiaPlace of rendering service not relevant



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Ro"aties An FS (cont=)

+$#ce o! Acc")#$ /contdM0

SC in 288 IR 48

Fo" %ein6 coe"ed U;' 9/10/ii0 t(o condition to %e !)$!i$$ed

Se"ice 2o)$d %e "ende"ed in Indi# #nd

Se"ice 2o)$d %e )ti$ied in Indi#'

Section 9(1)(vii) must be read with Section 5 which takes within its purview theterritorial nexus

S)!!icient ne*) %et(een t2e "ende"in6 o! e"ice #nd te""ito"i#$ $iit o!

Indi# nece#" to #.e t2e incoe !"o o!!2o"e e"ice t#*#%$e

Een #!te" ine"tion o! /i0 & /ii0 in Section 9 t2e p"oiion o! 9/10/i0

contin)e to 6oe"n )c2 c#e

To %e coe"ed in Sec' 9/10/ii0 t2e e"ice 2o)$d 2#e # $ie $in.4 (it2

Indi#'

R#tio o! IHHI Gtd' /SC0# not #pp$ to Copoite cont"#ct'/Re!e"

An#$do Ene"6i# S+A V' ITAT /7>>=0 115 TT /C2enn#i0 9


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Ro"aties An FS(cont=)

So!t(#"e ; E-Coe"ce +#ent

Gicene to )e So!t(#"e o" !o" e$ect"onic do(n$o#din6 o! cop)te" p"o6"#

; di6it#$ content # 6ie "ie to )e o! cop$ri'ht4 # pe" Cop"i62t Act'

"s it thus covered in *ro$alt$+

T2e Tet /OECD ; IRS Vie(0 ,hat is the consideration !or + i! !or ri'hts to use cop$ri'ht then ro$alt$

i! use o! cop$ri'ht onl$ incidental then business pro!its

i! !or a cop$ri'hted article then business pro!its



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T2e Tet /OECD ; IRS Vie(0 ,hat is the consideration

!or +/Cont0

i! !or ri'hts in the cop$ri'ht i.e. !or trans!er o! ownership

then /usiness "ncome or Capital 0ains.i! !or ri'hts in relation to cop$ri'ht to use 2 make

copies !or operation onl$ within its business then

business pro!its.i! Capital 0ains a 3ixed a$ment i.e. sale o! hardware

with embedded so!tware then break-up unless one part is

the dominant part 2 other parts are ancillar$.



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Soft%a$es:Fa6o$a!e::S#)n6 E$ect"onic /9< ITD 91 /,#n6#$o"e0:G)cent Tec2no$o6ie /=7 TT 1?30:TCS /781 ITR 10:No.i# E""icon #nd oto"o$#/95 ITD 7?90:Son#t# In!o"#tion Tec2no$o6ie/1>3 ITD 37< /,#n600:oto"o$# Inc/95 ITD 7?9 /De$2i-S,0

Aainst:

He#d St#"t /7=5 ITR 53> /AAR00

IT G#% /7=8 ITR /AAR00



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Sec' 9/10/i0 & Section 9/10/ii0 /ContM0+#ent !o" "ep#i":S#2#"# Ai"$ine /89 TT 7?=0:G)!t2#n# C#"6o/91 ITD 133 /De$2i00:Ai"po"t A)t2o"it o! Indi# /783 ITR TT 17>0

Connectiit p#ent-St#nd#"d !#ci$itie - /Wip"o /=> TT 1910 S.ce$$ /751 ITR 5300-S#te$$ite /Ai##t /=5 ITD


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Sec' 9/10/i0 & Section 9/10/ii0 /ContM0

+#ent !o" Se"ice to Ai"$ine:,"iti2 Ai"(# /83 TT 5190:G)!t2#n# e"#n Ai"$ine /=3 TT 1130

+#ent to #6ent o! # 2ippin6 cop#n:Ci"c)$#" 873 d#ted 19;>9;1995



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Rei%)"eent o! incident#$ e*pene in #ddition to !ee'

Rei%)"eent o! #$$oc#ted ; 2#"ed cot'

+#ent !o" e"ice #t cot o" cot p$) %#i

Rei%)"eent o! cot o! t2i"d p#"t'

Rei%)"eent o! #$#"ie & $iin6 #$$o(#nce o!

dep)tee'



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CIT V' TEGCO /7 SOT =9? /)00

Aainst:

Coc2in Re!ine"ie /777 ITR 35< /Pe"00

Hind#$co /78= ITR 175 /AT00

CIT V' D)n$op /1


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Rei%)"eent o! #$$oc#ted o" 2#"ed cot

D#n!o Ind' /7?= ITR 1 /AAR00

Rei%)"eent o! e"ice #t cot o" cot p$) %#iTi.in /783 ITR ?8 @ AAR0

Rei%)"eent o! cot o! t2i"d p#"t

:W#$$#ce +2#"# /78= ITR 98 @ AAR0:Rei%)"eent #$#"ie & $iin6 #$$o(#nce to dep)tee

:He$d #$#"ie o! tec2nici#n

HCG In!ote /78< ITR 7?1 @ De$2i0

CIT V' ,HEG /757 ITR 71= @ De$2i0

:He$d # FTS & #$#"ie:AT & S Indi# /+0 Gtd' /7=8 ITR


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SUSHIG GAPHANI

G#.2#ni & Aoci#te

C2#"te"ed Acco)nt#nt

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icai-mumbai- 18th july09 deduction of tds us195.pdf