Tds u/s. 195 on imports

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CA Sanjeev Kr Jain (Querist)
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14 November 2011 For AY 2008-09 AO did addition for non deduction of TDS u/s. 195. Goods imported from Timken as US based company. Order was placed on line, Goods were dispatched by Timken Singapore Pte & Timken Wuxi Bearing Co, China, No certificates u/s. 195(3) was obtained for lower or no deduction of TDS. Timken has office, plant and technical center in India also.

All above facts were mentioned by AO in order and than he disallowed all the purchased from Timken u/s. 40(a)(i) for non deduction of TDS u/s. 195 as AO further says that the this transaction contain profit element

Rahul

Rahul (Expert)
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14 November 2011 Dear Mr.Jain

Considering the fact mentioned by you, the tax liability can be avoided by taking refuge in Article 5 and Article 7 of Indo China DTAA. As per the treaty the business profits of enterprise of the contracting state ( China ) are taxable in other contracting state ( India ) only when there is a Permanent establishment in Other contracting state.

I need some more detais regarding the presence of Timken Singapore in India to arrive at a conclusion.

CA Sanjeev Kr Jain

CA Sanjeev Kr Jain (Querist)
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14 November 2011 Thanks Rahul for such prompt reply.

It it mandatory to deduct TDS u/s. 195 if foreign exporter is having PE in India.

May I have your cell no. along with preferable convenient times to call you.

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