Saturday, December 12, 2015

10 million USD penalty levied on Satyam for violating US Securities Exchange Act won't attract TDS

The applicant (‘Satyam Computer services ltd.’) approached Authority for Advance Ruling (‘AAR’) to consider whether payment of penalty levied by US Court (due to violation of provisions of US Securities Exchange Act, 1934) would attract provisions of section 195.

The AAR held as under:


(1)  It is a trite law that unless the payment made attracts the tax under the Income-tax Act, there would be no liability to deduct tax under section 195.


(2)  Penalty ordered by the US Court does not attract any tax liability, thus, applicant would not be required to withhold tax on such penalty under section 195.- Satyam Computer Services Ltd., In re [2015] 64 taxmann.com 162 (AAR - New Delhi)
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