TDS - mobilization and demobilization costs reimbursed to foreign company- Assessee not liable to deduct tax at source under Section 195(1) - Samsung Electronic not followed – Delhi High Court
TDS on payments to foreign companies has been a bone of contention of late – with the sensational Karnataka High Court judgement in the Samsung Electronic case -
While the Samsung case is in appeal before the Supreme Court, the Delhi High Court in a recent judgement was not exactly in agreement with the Karnataka High Court. The Delhi High Court held that:-
The judgment of the Supreme Court is not to be read as a statute. We have to cull out the ratio of the judgment viz. what it decides and not logically follows from it. Plain language of Section 195 of the Act shows that the tax at source is to be deducted on the “sum chargeable under the provisions of the Act”. One can, therefore, reasonably say that the obligation to deduct tax at source is attracted only when the payment is chargeable to tax in India.
We bring you the High Court order today – please see Breaking News