Law:

Section:

Section 201(1A) of the Income-tax Act, 1961 - Deduction of tax at source - Consequence of failure to deduct or pay  Where in order to facilitate easy and quick communication and to ensure internet access with its group companies throughout would, it used services of a U. K. company, which was in business of providing services in area of connectivity by would inside network and Tribunal decided appeal on question of deduction of tax from payments made to said company without looking at contract between assessee and said company under which payment had been made, matter was to remitted to Tribunal for re-consideration of issue in terms of contract. [A.Y. 2003-04]. The assessee-company's parent company was in France. It was engaged in the business of manufacturing switch gears and selling electrical equipments. In order to facilitate easy and quick communication and to ensure internet access with its group companies throughout the world, the assessee used the services of Equant, U.K., which was in the business of providing service in the area of connectivity by world-wide network. The assessee had paid certain amount to the U. K. Company. Its case was that it was not liable to deduct tax at source from the payment made to the U.K. Company. On the basis of a survey the Assessing Officer held that there was short deduction on payments made to Equant, based the U.K. Company. He therefore, charged, interest under section 201(1A) from it. The Commissioner (Appeals) held that the payment made by the assessee-company could not be considered to be a payment for 'technical services', liable for deduction of tax at source. The Tribunal, however, restored the order of the Assessing Officer. Held that having regard to the fact that the contract was very much available at the time of passing of the impugned order, but, the Tribunal had made an observation in the impugned order that the contract had not been placed before it, the impugned order was to be set aside and the matter was to be remitted back to the Tribunal for re-consideration of the issue in terms of the contract which was very much available on its record. JUDGMENT K. Raviraja Pandian, J.-In this appeal, the…

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