Sec 195 of income tax

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Jai Bajaj (Querist)
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10 April 2012 Q. 1 Indian Co paid some amount through LC against the purchases made from foreign co. Whether indian co is liable to deduct TDS?
It is to noted that Foreign company does not have any branch office in india. IT office sent a notice on the 2 ground
1. payment made through LC, it means income deemed to accrue in india and
2. not following of proper procedure like not submission of required form etc.

What option do I have and on what ground I can oppose the order of IT Officer? Please suggest as soon as possible.

CMA Ashutosh Kumar Gupta

CMA Ashutosh Kumar Gupta (Expert)
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11 April 2012 It appears vide your query, the facts given, that the payment in question is towards the cost of purchase and does not tentamount to income to the receipient HENCE the question of application of section 195 does not appear to arise, in my opinion. However, others' opinions may also be sought in the matter.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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11 April 2012 You have purchased goods from outside India and the seller is also from outside India having no connection with selling and purchasing of goods or services in India. So the provisions of Section 9 are not at all applicable. Therefore, the provisions of Section 195 are not applicable. For opening of LC you need not file forms required for sending foreign currency to the seller out side India. You have not stated what notice the AO has given you can mail me at ssunderagarwal@gmail.com so that proper reply can be given

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