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2016 (10) TMI 7 - ITAT BANGALORETDS u/s 195 - liability of tax deduction at source (TDS) on payment made to foreign constituents - time frame for initiating action u/s. 201(1) against the non-residents - Held that:- Having carefully examined the rival submissions and the material on record, we find that the legislature has consciously used the word “resident in India”. Had it been the intention of the legislature to prescribe the time period for the non-residents, they would have comfortably used the word “payee”, but they have used the word ‘resident in India’. Therefore, the intention of the legislature is very clear that they do not want to fix the time limit for initiating action u/s. 201(1) for non-residents. In the light of these facts, we are of the view that the assessment is not barred by limitation as no time frame has been specified for initiating action u/s. 201(1) of the Act against the non-residents. We would find from the consultancy agreement that the assessee entered into agreement with the foreign constituent, i.e., MJR Consultancy Pte Ltd., a company incorporated in Singapore we find that the Consultant was required to render consultancy services on different issues by applying his technical know-how and whatever services are rendered, advisories were issued to the assessee, the Consultant shall immediately assign and transfer the rights in that consultancy services to the assessee and the assessee would be able to use that services for its enduring benefit in the succeeding years without any assistance of the Consultant. Though it has not been spelt out the specific nature of the consultancy services rendered by the Consultant, but from a careful perusal of this agreement and documents available on record, it appears that whatever consultancy services were rendered by the Consultant, it was made available to the assessee for its enduring benefit and the same consultancy advisories, opinions or services received by the assessee can be used by the assessee for its business purposes in the succeeding years without any aid and assistance of the Consultant. Therefore, in the light of these facts, we are of the view that the consultancy services having been made available to the assessee, the Revenue has rightly held that the Singapore company as a Consultant has made available to the assessee company technical knowledge in the form of expertise in the operation of its business which was in its possession along with experience and know-how and the same technical know-how can be used by the assessee for its enduring benefit and thus since the assessee has made the payment for fees for technical services, it was required to deduct tax at source and for non-deduction of the same, he can be declared to be an assessee in default. Accordingly, we confirm the order of the CIT(Appeals) and dismiss the appeals of the assessee.
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