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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