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No disallowance u/s 40(a)(i) for failure to deduct tax on the basis of retrospective amendment to law

March 20, 2020[2020] 114 taxmann.com 723 (Mumbai - Trib.)

SLD : Retrospective amendment to provision of section 9(1)(vii) cannot fasten obligation to deduct tax at source, when not in force at relevant time when payment was made

INTERNATIONAL TAXATION : Where non-resident service providers were not liable to tax in respect of FTS at time of remittance for services rendered outside India, no disallowance could be made under section 40(a)(i), in respect of payments made towards IVTC charges for failure to deduct tax at source under section 195, on basis of retrospective amendment to provision of section 9(1)(vii)

INTERNATIONAL TAXATION : Where payment made for IVTC services was not liable for disallowances under section 40(a)(i) for failure to deduct tax at source under section 195, then consequent reimbursement of expenses in relation to providing said technical services also could not be disallowed under section 40(a)(i), for failure to deduct tax at source under section 195

INCOME TAX : Amendment to section 40(a)(ia) brought by Finance Act, 2014, restricting disallowance to 30 per cent of amount paid on which tax had not been deducted at source, will have no retrospective operation

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