Treaty between India and US (non-discrimination) – Indian decision on applicability of withholding tax on lease rentals paid to non-residents and deductibility of such payments for Indian tax purposes

The Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 31 January 2008 (reported in April 2008) in the case of Millennium Infocom Technologies Ltd. v. ACIT (2008-21 SOT 152) on whether tax needs to be withheld from a payment to a non-resident where the tax authorities have not made a determination if the payment is chargeable to tax in India, and in the absence of such a tax being withheld, whether the payment can be disallowed as a deductible expense.

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