The Revenue Audit
raised an objection that the assessee had made remittances to foreign parties
without deduction of TDS u/s 195 and that the expenditure ought to have been
disallowed u/s 40(a)(i). In reply, the AO wrote back stating that as the
amounts remitted to the foreign parties were not chargeable to tax in India,
the assessee was under no obligation to deduct tax u/s 195 and that the
expenditure was not disallowable u/s 40(a)(i). However, she still issued a
notice u/s 147 and reopened the assessment to disallow the said expenditure.
The assessee filed a Writ Petition to challenge the reopening. HELD allowing
the Petition.
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