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2023 (1) TMI 1246 - AT - Income TaxTDS u/s 195 - Fees for Technical Services as per India Singapore DTAA - Whether services provided as make available in nature? - Levy of demand u/s 201/201A - income of the non resident as accrued in India or not? - remittance made to various non resident entities towards Architectural Design consultancy services, Wind Engineering Consultancy services and Landscape Architectural Consultancy Services - CIT-A treated it as consultancy services - HELD THAT:- The nature of payment was pertained to consultancy services for master planning of the specific project namely Wadala TT, Mumbai. As per clause 14 of the agreement, the design prepared by the design consultant was solely for the purpose of the above referred project. Woha design consultant is a tax resident of Singapore and Article 12 of the India Singapore DTAA deals with the taxability of income from Royalties & FTS. It provides that services will be considered as FTS only if such vendor is making available the technical knowledge, experience, skill, knowhow or process which enable the person acquiring the services to apply the technological contained therein. Services of managerial, technical or consultancy will be regarded as fees for technical services only if such services consists of the development and transfer of a technical plan or technical design but categorically exclude any service that does not make available and does not enable the person acquiring the service to apply the technologically contained thereon on its own. Similarly, the payment made to Rowan Williams Davies relating to wind micro climate engineering consultancy services, payment made to landscape architectural consultancy service to Sitetectonix Pte. Ltd. & payment for marking consultancy services to Lodha Developer U.K. Ltd were also not taxable as fees for technical services, since, the services do not meet ‘make available’ criteria. A.O has not brought any material on record to demonstrate that how the service provider has made available to the assessee any technical knowledge, skill etc. which can be applied by the assessee independently in future. Therefore, we do not find any reason to interfere in the findings of the Ld. CIT(A). Remittance made to various non-resident towards brokerage for sale of projects in India - HELD THAT:- The assessee has made payment of brokerage to non-resident brokers for assistance on sale of flats to non-resident in the project developed by the assessee in India. The entire work by the broker was carried out outside India and the brokerage payment were made by the assessee in the bank account of foreign parties outside India. The brokers has not carried out any operation in India. Therefore, the AO has not proved that how the provisions of Sec. 5(2) and provisions of Sec.9(1)(i) of the Act are attracted in the case of the assessee. Regarding applicability of provision of Sec.9(1)(vii) by way of treating the payment as fees for technical services the A.O has not proved that how such payment made in the context of ‘make available’ clause. From the perusal of material on record it is observed that there is no element of technical knowledge, experience, skill knowhow or process in the rendering of brokerage services. No such technical knowledge etc. is made available to the assessee by such brokeRs. Therefore no infirmity in the decision of ld. CIT(A) that the payment of brokerage by the assessee to the brokers is not taxable in India either pursuant to Sec. 9(1)(vii) or under the provisions of DTAA due to restrictive definition of FTS/FIS, therefore, the ground of appeal of revenue stand dismissed. Reimbursement of Expenses - assessee had made remittance to foreign parties towards reimbursement of expenses - reason for non-deduction of TDS the assessee submitted that bankers Mohandas LLC had incurred travel and miscellaneous expenses of its employees visiting India for rendering services to the assessee - HELD THAT:- As in the case of Director of Income Tax (International Taxation) Vs. Krupp Ltd. GMBH (2010 (3) TMI 287 - BOMBAY HIGH COURT] held that reimbursement of expenses for air tickets could not be treated as part of taxable income of the assessee. A.O had neither brought any relevant material on record to substantiate that reimbursement of expenses were in the nature FTS nor disproved the claim of the assessee based on back to back invoices that no profit element were embedded in the reimbursement of such expenses. In the light of the above facts and findings we don’t find any merit in the ground of appeal, therefore, ground of appeal of the revenue stand dismissed. Remittance for purchases in UAE - As per DTAA with UAE (Article 7), payment to an entity in UAE can be brought to tax in India only when such entity has a permanent establishment in India - HELD THAT:- AO has not brought any material on record to prove contrary, therefore we don’t find any merit in this ground of appeal of the revenue. Accordingly, this ground of appeal stand dismissed.
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