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2022 (8) TMI 1297 - ITAT DELHIIncome deemed to accrue or arise in India - receipt claimed as commission income is nothing but royalty taxable u/s 9(1)(vi) - India-Germany DTAA - commission income received by the assessee from Springer Nature India Private Limited [SNIPL] as fee for technical services [FTS] under Article 12 of the India-Germany DTAA by the CIT(A) by changing the color of income, which was treated as royalty by the Assessing Officer - HELD THAT:- To construe any payment as FTS, payment should be a consideration for rendering of any managerial services. The ld. CIT(A) was of the firm belief that the assessee was involved in rendition of managerial services to SIPL and, therefore, the commission received for such services is in the nature of FTS. Interestingly, the concept of FTS is not present in the OECD Model Convention. However, it finds mention in the UN Model Convention wherein Article 12A grants the source country a primary right to tax such fee from technical services. In fact, the Commentary to the UN Model Convention lays down clear guidance in respect of the meaning of the term ‘managerial services’ Managerial services entail the element of management of the business of the service recipient in a substantial manner. In our view, mere provision of support services cannot be labeled as managerial services. Hiring of outside parties to receive support in respect of the operational aspects of a business cannot qualify as managerial services unless the service provider lays down policies or executes such policies by managing the personnel of the service recipient. In light of the afore-stated judgments, we do not find any merit in the findings of the ld. CIT(A) by treating the commission as ‘managerial service’ under the India Germany DTAA. There is no dispute that the assessee has received commission as per the Commissionaire Agreement with SIPL which is nothing but export commission/sales commission, which has been treated as FTS. We set aside the findings of the ld. CIT(A) and direct the Assessing Officer to delete the impugned addition. Decided in favour of assessee. Non grant of credit of TDS claim as per the return of income - HELD THAT:- We direct the AO to consider the claim as per the provisions of law and allow full credit of TDS after due verification. This ground is allowed for statistical purposes.
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