As payments non-taxable in India as per DTAA between USA & India,Thus, No TDS.

Facts in Brief:

1.  The assessee paid data storage space charges to INetU, a non-resident. The Assessing Officer while completing the assessment was of the view that since the assessee did not deduct TDS at the time of making payment, the said amount was not allowable as deduction under section 40(a)(i).

2.  The Commissioner (Appeals) allowed the claim of the assessee holding that the payments in question were not taxable in India as per DTAA between USA and India and therefore they were not liable for TDS.

On appeal, ITAT held as under:

3.  There is no good reason to interfere with the findings of the Commissioner (Appeals) in deleting the disallowance made under section 40(a)(i). The findings of the Commissioner (Appeals) have not been rebutted with any evidence by the revenue. The Assessing Officer has not given any finding as to how data storage charges paid by the assessee are falling either under royalty or fees for technical services so as to deduct TDS on such payments made to non-resident outside India. In the circumstances, the order of the Commissioner (Appeals) in deleting the disallowance is upheld.