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The case of Addl CIT Vs. VLCC Health Care Ltd. (ITA No. 4414/DEL/2017) decided by the Delhi Income Tax Appellate Tribunal addresses the issue of whether revenue shared with collaborators or franchisees under a Joint Venture Partnership model attracts a TDS liability u/s 194I of the Income Tax Act.
The Delhi Income Tax Appellate Tribunal concluded that revenue shared under a Joint Venture model where the assessee bears all expenses and shares only the surplus is not liable to Tax Deducted at Source u/s 194I, since no services or premises were hired from the collaborators. This ruling clarifies that pure revenue-sharing models without actual service provision or rental arrangements fall outside the ambit of Section 194I’s Tax Deducted at Source provisions.
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