AO’s order under Sec. 195(2) determining amount of TDS to be deducted isn’t appealable

Facts

a)    Assessee (Bangalore International Airport Limited) was required to make payment to non-resident for the preparation of the bid papers and project proposal with regard to an Airport Project undertaken by it.

b)    It approached the Assessing Officer (AO) under Section 195(2) by filing the application for seeking permission to make the said payment without deduction of tax at source.

c)    AO passed the respective order by holding that the payment in question was in the nature of Fees for Technical Services ('FTS'). Therefore, the assessee was liable to deduct the tax before making such payment.

d)    Assessee challenged the order of the AO before the CIT (Appeals). CIT (Appeals) confirmed the order of the AO. 

The issue that was disputed before the tribunal was as under-

“Whether an appeal could be filed against the order of AO passed under Section 195(2)?”

The tribunal held as under-

1)    As per Section 246A of the Income-tax Act which talks about appealable orders before CIT(Appeals), the order passed under Section 195(2) does not fall in the category of appealable orders . Therefore, the CIT (Appeals) has no jurisdiction to entertain and decide the appeal against the order passed under Section 195(2).

2)    Hence, order passed by CIT(A) by entertaining such appeal was unsustainable for want of jurisdiction. Consequently, no appeal could be entertained against the order of the CIT(A) on the said subject matter- [2016] 68 taxmann.com 228 (Bangalore - Trib.)