International Tax Knowledge Hub

Therefore, assessees may safely remit export commissions to non-resident agents for overseas services, without withholding tax under Section 195, provided the factual matrix aligns and appropriate documentation regarding the nature of services is maintained..

This conclusion was supported by both the AAR ruling and the Supreme Court’s refusal to overturn that decision..

Consequently, only receipts attributable to recorded content or other specifically protected rights may be taxable as royalty, subject to proper apportionment in bundled contracts..

Consequently, telecom operators are not liable to deduct TDS under Section 194J for interconnect and roaming charges paid to foreign telecom entities, provided there is no element of human intervention or exclusive exploitation of a process..

74,37,77,694/- to the assessee’s income as ‘interest’ under Article 11 of the India-Ireland DTAA was deleted..

Till the appellate proceedings are concluded, recovery action based on an erroneous method cannot be permitted, particularly where it is at odds with binding judicial precedents..

Taxpayers must ensure compliance with procedural requirements during appellate proceedings and be prepared to present cogent evidence to support their claims..

Taxpayers engaging in similar captive consumption arrangements should ensure their benchmarking aligns with this approach, referencing end-consumer supply rates rather than internal transfer prices or generation company tariffs..

The decision underscores the need for revenue authorities to holistically consider the entire financial arrangement between the assessee and its AE, rather than isolating and benchmarking specific expense heads in a piecemeal fashion..

Furthermore, reimbursements of actual costs without any income element—such as ESOP reimbursements—do not attract TDS provisions, and disallowances on this ground are not sustainable..