Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (7) TMI 644 - AT - Income TaxIncome accrued in India - Royalty receipt - revenues under the IDC agreement - India-Singapore DTAA - HELD THAT:- We find that in the instant case, appellant only provides service by using its hardware/security devices/personnel and not use of any software - the appellant is only providing IDC service which includes administration and supervision of central infrastructure, mailbox hosting services and website hosting services. From the enunciation of law in Bharati Axa General Insurance Co. Ltd [2010 (8) TMI 8 - AUTHORITY FOR ADVANCE RULINGS], ExxonMobil Company India (P.) Ltd [2018 (3) TMI 938 - ITAT MUMBAI], Standard Chartered Bank v. DDIT [2011 (5) TMI 580 - ITAT, MUMBAI], DCIT v. M/s Reliance Jio Infocomm Ltd [2019 (6) TMI 532 - ITAT MUMBAI] narrated hereinbefore, it is quite luculent that revenues under the IDC agreement ought not to be taxed in the hands of the appellant as royalty under the Act and/or India-Singapore DTAA. Therefore, we delete the addition made by the AO towards IDC charges and allow ground of appeal of assessee. Claim of management service fees made by the appellant as non-taxable - HELD THAT:- We find that the services provided under the management agreement broadly include (i) consultancy services to support the sales activities of Surf Gold, (ii) legal services, (iii) financial advisory services and (iv) human resource assistance. There is no dispute here that under the provisions of section 9(1)(vii) of the Act, rendering of management services will be taxable as FTS. However, Edenred, by virtue of section 90(2) of the Act, is eligible to rely on the provisions of the India-Singapore DTAA, should the same be more beneficial than the provisions of the Act. In this regard, we fruitfully rely on the judgment in the case of New Skies Satellite BV & Ors [2016 (2) TMI 415 - DELHI HIGH COURT] wherein it is held that provisions of DTAA shall prevail over the provisions of the Act, if they more beneficial. As per the India-Singapore DTAA, the services in the nature of managerial, technical or consultancy nature are taxable as FTS if such services are ‘made available’ to the service recipient. We find that in the instant case, the management services are provided only to support SurfGold in carrying on its business efficiently and running the business in line with the business model, policies and best practices followed by the Edenred group. These services do not make available any technical knowledge, skill, knowhow or processes to SurfGold. Therefore, we delete the addition made by the AO towards management services fees and allow ground of appeal of assessee. Claim of referral fees as non-taxable - India-Singapore DTAA -HELD THAT:- It is relevant to mention here that as per the India-Singapore DTAA, the services in the nature of managerial, technical or consultancy nature are taxable as FTS, if such services are ‘made available’ to the service recipient. In the instant case, referral services/other services are provided to support Surf Gold in carrying on its business. These services do not make available any technical knowledge, skill, knowhow or processes to SurfGold because there is no transmission of the technical knowledge, experience, skill etc. from the appellant to SurfGold or its clients. The revenues under the referral agreement is not taxable in the hands of the appellant as royalty under the Act and/or India-Singapore DTAA or FTS under the India-Singapore DTAA. Addition to be deleted. Non granting credit for TDS - AO has not granted credit of TDS while computing the net tax liability under the Act while issuing the final assessment order post DRP directions - HELD THAT:- As the appellant has filed a rectification application before the AO, which is still pending for disposal. We direct the AO to grant credit of TDS to the appellant after due verification. Levy of interest u/s 234A - Compute consequential as per law after granting TDS credit due to the appellant. Levying interest u/s 234B and interest u/s 234C - HELD THAT:- As we have decided that the revenues from IDC agreement, management agreement and referral agreement are not taxable in India and therefore, the appellant is not liable to pay advance taxes. Accordingly, the levy of interest made by the AO u/s 234B is deleted.
|