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2020 (3) TMI 1438 - AT - Income TaxTDS u/s 195 - payments made by the Appellant to its subsidiary (AMSI) - Treatment of Payment as Royalty (Composite Payment) - fees for included services - HELD THAT:- As per the above details about the nature of services received by the assessee from its US-AE, it comes out that the US-AE provides services regarding finding of customers for the assessee company to whom the assessee can render various services. It is seen that in the present case, no information as such is provided by US-AE of the assessee company and such technical data or other data are used by the AE of the assessee company itself to generate customer leads and after having negotiations with such potential customers, US-AE of the assesssee helped the assessee company in getting orders from various customers abroad. In our considered opinion, in the facts of the present case, this Tribunal order relied upon by the ld. DR in TNT Express Worldwide (UK) [2016 (6) TMI 547 - ITAT BANGALORE] is not applicable to the present case. No other argument was advanced by the ld. DR of the revenue in this regard as to how the payment in question is a payment for royalty. Payment in question is payment for Commercial Experience provided by US AE of the assessee company to the assessee company - from various e-mails it cannot be said that any information was provided by Mr.Todd Brownrout or Mr.Colin Wheeler to the assessee company which can be said to be providing information about the commercial experience. Fees for included services - Any services to be considered as included service, it is essential that the services provider makes available experience, skill, know-how or process or transfer of assets, transfer of development and technical design etc. In the present case, as per the scope of work noted above and as noted by the AO in para-17 of the assessment order, the marketing team of the service provider i.e. US-AE used to generate customer leads using/subscribing customer data base, market research and analysis and online research data and hence, it is seen that the service provider has not made available any technical knowledge, experience, know-how, process or develop and transfer technical plan on technical design. Hence, the impugned payment is not hit by Article-12(4) of the Indo-US DTAA i.e. fees for included services. As per above discussion, we find that in the present case, the impugned payment cannot be said to be on account of ‘royalty’ or fees for included services. At this juncture, we feel it proper to discuss and examine the applicability of the judgments cited by ld. AR of the assessee as noted above. We first discuss and examine the applicability of the Tribunal order rendered in the case of M/s Adidas Sourcing Ltd. vs Asst. DIT(2013 (1) TMI 106 - ITAT DELHI] In this case, it was held that to characterize a particular stream of income as fees for technical services, it is necessary that some sort of managerial, technical and consultancy services should have been rendered in consideration and the services rendered under the buying agencies we find the agreement are not technical services, but routine services offered in procurement of assistance. In the present case, the agreement in question is not procurement but for supply of services by the assessee company to an overseas customer but this tribunal order is applicable because the entire service rendered by the US AE is similar in connection with the sale of services of the assessee abroad and this Tribunal order supports the view taken by us in the above para. As per the above discussion, we have seen that in the facts of the present case, the services received by the assessee company cannot be considered as ‘royalty’ or fees for included services and the assessee was not under obligation to deduct TDS on this payment and as a consequence, the demand raised by the AO u/s 201(1) & 201(1A) of the Act cannot survive and the same is deleted. Appeal of assessee allowed.
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