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2012 (12) TMI 780 - ITAT, MUMBAI
Sale and Purchase of Shares – Business Income vs Capital Gain - Held that:- Appellant has earned business income on non delivery based transactions for A.Y.2004-2005 but that does not mean that income earned on sale of shares held as investment can be taxed as business income in the subsequent years. The appellant has made clear distinction between delivery based and non delivery based transactions and admitted income accordingly and except for A.Y.2004-2005, the appellant did not indulge in any non delivery based share transactions. Thus even shares purchased as investment had to be sold within a short time depending on the market conditions. Thus, the sale of shares was only with a view to protect the amount invested by the appellant which would not convert the investment into stock-in trade.
It is found from the balance sheet filed that the appellant held shares as investment and after transferring the shares in the name of the appellant the shares were sold as evidenced by the demat account and the STT was paid at a higher rate application to the investor and stand of the A.O. is no longer valid in the light of the decision of CIT Versus Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] - in favour of assessee.
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2012 (12) TMI 779 - ITAT MUMBAI
Depreciation on fixed assets utilized for the charitable purpose – Society registered u/s 12A – Held that:- Following the decision of court in case of DIRECTOR OF INCOME TAX VERSUS VISHWA JAGRITI MISSION [2012 (4) TMI 289 - DELHI HIGH COURT ] having regard to the consensus of judicial opinion on the precise question it is held that claim of depreciation on fixed assets utilized for the charitable purposes has to be allowed while arriving at the income available for application to charitable and religious purposes, since the income of the society should be computed on the basis of commercial principles – no infirmity in the order passed by CIT(A), affirm the order of CIT(A) and dismiss the appeal filed by the revenue - Appeal of Revenue dismissed.
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2012 (12) TMI 778 - ITAT MUMBAI
Additions u/s 40A(3) - assessee had shown 19.27% Gross Profit (GP), AO fixed the GP at 26.52%. FAA reduced it to 25% - Held that:- Additional residential accommodations granted to the tenants upto 10% and assumed for commercial premises that additional area would be 20%. It is a fact that the rates for commercial premises on ground floor command higher rates than the residential flat on ground floor. The very fact that the stamp duty rate at the relevant time was Rs.9830/- per sq ft against the residential premises rate of Rs.4660/- per sq ft also substantiates the contention of the appellant - it is established by the appellant that the premises held by Mrs. Chandrika Shah was a commercial premise as certified by the Government agency. Also appellant stated that if the commercial area originally held is converted into residential area based on the rate prevailing in that area, the space allocable to Mrs. Chandrika Shah would be higher than the area considered by the AO. Considering all the above and considering the fact that the net profit is estimated at 25% of the sales
As it is a matter of estimation and that also in a search and seizure related matter & assessee has admitted that expenses outside the books were incurred opined here that 2% reduction in the formula adopted by the FAA will meet the end of justice. AO is directed to recalculate the income of the assessee @ 23% of the cost of the sales (sales minus profit).
Section 40 A(3) disallowance - As in a matter where income is determined on estimate basis, there is no need to make further additions including additions made u/s. 40A. Upholding the order of the FAA, in this regard, the appeals filed by the Revenue dismissed.
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2012 (12) TMI 777 - ITAT, AHMEDABAD
Undisclosed capital gains - assessment order passed by AO u/s 153A/153C - Held that:- Admittedly no search operation was conducted at the premises of the assessee and no document was recovered from the premises of the assessee CIT(A) has not decided this issue despite a specific ground raised by the assessee and the observation of CIT(A) that the constitutional validity of provisions of Section 153A/153C was challenged and any ground of appeal challenging the constitutional validity of the forming the provisions.
CIT(A) has not decided this issue of his jurisdiction and validity of assessment despite the fact that of specific ground had been raised by the assessee. In interest of justice remit back this matter to CIT(A) to decide afresh after providing reasonable opportunity of being heard to assessee - in favour of assessee allowed for statistical purposes.
Disallowance of Depreciation,Levy of Interest u/s 234A, 234B,234C,234D and Penalty U/S 271(1)(c) - Held that:- As main issues are remitted back to the file of CIT(A) for fresh adjudication hence, the inter-connected issue is remitted back to the file of CIT(A) for fresh adjudication - in favour of assessee allowed for statistical purposes.
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2012 (12) TMI 776 - ITAT, BANGALORE
Sale of Software – Royalty – failure to deduct tax u/s. 195 - assessee in default u/s. 201(1) - Held that:- Analysis of the DTAA, Income Tax Act, Copyright Act that the payment would constitute 'royalty' within the meaning of Article 12(3) of the DTAA and even as per the provisions of 9(1)(vi) as the definition of 'royalty' under clause 9(1)(vi) is broader than the definition of 'royalty' under the DTAA as the right that is transferred in the present case is the transfer of copyright including the right to make copy of software for internal business, and payment made in that regard would constitute 'royalty' for imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill as per clause (iv) of Explanation 2 to Section 9(1)(vi).
In view of the provisions of Section 90 agreements with foreign countries DTAA would override the provisions of the Act. Once it is held that payment made by the respondents to the non-resident Companies would amount to 'royalty' within the meaning of Article 12 of the DTAA with the respective country, it is clear that the payment made by the respondents to the non-resident supplier would amount to royalty, thus it is clear that there is obligation on the part of the respondents to deduct tax at source under Section 195 - the facts of the present case are similar to the facts involved in M/s. Samsung Electronics Co. Ltd. v. DCIT (International Taxation) [2012 (8) TMI 112 - ITAT BANGALORE] therefore respectfully following the said order appeals of the assessee dismissed - against assessee.
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2012 (12) TMI 775 - ITAT CHANDIGARH
Revisionary powers used by CIT(A) - order of the A.O. was erroneous – Capital Gain - Held that:- The observations of CIT clearly indicate that he invoked the doctrine of lifting the veil. The doctrine of substance or form is generally applicable to the assessment proceedings and not the revisionary proceedings. Further, the AO, has considered the issue in question, applied his mind and did not invoke the provisions of Section 45(4).
In the present case, pertaining to capital gains on leasehold property rights the said transaction has been duly considered by the AO, as is evident from the questionnaire issued and reply submitted by the assessee. Further, the assessee has filed documentary evidence, indicating, the date of transaction, as well as the date of retirement of the said partner. Right in leasehold property in question has already been sold much before the date of retirement & had nothing to do with retirement of partner & do not fall with in the purview of Distribution of assets. It is well settled proposition that, where AO has taken legally permissible view, CIT cannot acquire revisional jurisdiction u/s 263 merely because another view is possible - appeal of assessee is allowed.
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2012 (12) TMI 774 - ITAT, AGRA
Disallowance of Expenses - non discharge on SCN - Held that:- The production of books of account and vouchers was not obligatory on the appellant for want of issue and service of notice u/s 143(2). Assessee has failed to produce copy of PAN and also failed to obtain information regarding service of notice sent through Speed Post from Postal Authority. Under the circumstances where the Department in reply to RTI application of the assessee it was clearly stated that the assessee may obtain information from Post Office that on whom this notice was served. These facts clearly show that the assessee has failed to discharge its onus and also failed to rebut the presumptions regarding service of notice. Contrary to this, Revenue has reasonably discharged its onus as per the facts noted above based on which the notice under section 143(2)was sent by Speed Post on the address which is the address in accordance with section 282 - order of CIT(A) is, therefore, set aside and the order of Assessing Officer is restored on the issue.
Set aside the finding of CIT(A) in respect of non-issuance of notice under section 143(2) and quashed the assessment, therefore, the CIT(A) is required to give finding after recording complete facts on merit of the case - appeal of the Revenue is allowed and allowed for Statistical purposes.
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2012 (12) TMI 773 - MADRAS HIGH COURT
Customs House Agents Licence - Held that:- As decided in SUNIL KOHLI & ORS Versus UNION OF INDIA & ORS [2012 (10) TMI 638 - SUPREME COURT] who had cleared the examinations under the regulations issued in the year, 1984, would be eligible for the grant of licence, subject to their fulfilling the other conditions of eligibility, as the actions already taken under the earlier regulations issued in the year, 1984, had been saved by the new regulations issued in the year 2004.
There is no dispute that the petitioner had passed the written, as well as the oral examination under Regulation 9 of the Customs House Agents Licensing Regulations, 1984, which were existing prior to the coming into force of the new regulations in the year, 2004. Thus in such circumstances, this Court finds it appropriate to direct the department to issue the necessary certificate granting the Customs House Agents Licence to the petitioner, as per Regulation 9 of the Customs House Agents Licencing Regulations, 2004, within a period of eight weeks from the date of receipt of a copy of this order.
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2012 (12) TMI 772 - DELHI HIGH COURT
Scheme of Amalgamation - Held that:- Upon sanction of the Scheme, all the employees of the Transferor entity shall become the employees of the Transferee Company without any break or interruption in their services - all the property, rights and powers & liabilities and duties of the Transferor Company be transferred to and vest in the Transferee Company without any further act or deed.
Once the exchange ratio of the shares have been worked out by the Chartered Accountants, who are expert in the field of valuation and if no mistake is pointed out in the said valuation, it is not for the court to substitute is exchange ratio, especially when it has been accepted without demur unanimously by all the shareholders of the two companies, thus objection raised by the Official Liquidator that the valuation report is not on the basis of Book Value of shares is without merit.
Thus in view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation filed by the Regional Director, Northern Region and no objection by the Official Liquidator, the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation - The Petitioner Companies will comply with the statutory requirements in accordance with law with filing certified copy of the formal order with the ROC within 30 days - order will not be construed as an order granting exemption from payment of stamp duty or any other charges - Petitioner Companies would voluntarily deposit a sum of Rs. 1 Lac in the Common Pool fund of the Official Liquidator within three weeks from today.
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2012 (12) TMI 771 - GUJARAT HIGH COURT
Extension of bid payment period - Winner of bid did not pay sale consideration even during time for which he was seeking extension, sale was to be cancelled and earnest money seized - whether the appellant in whose favour a sale came to be confirmed by order dated 22.02.2006 on certain terms and conditions as provided in the tender having committed default -
Held that:- The applicant having failed to comply with the payment time-table then filed Company Application wherein it is clear from the prayer made in the Judges' Summons and the affidavit filed in support of the Judges' Summons that what was prayed was extension of time only up to 31.08.2006 and the reason set out for seeking such extension wherein it was stated that, "on account of serious sickness in the family of one of its active partners and also on account of other reasons beyond its control". This Court has an additional reason to deny the prayer /relief to the appellant-applicant because the prayer for extension of time stood granted in favour of the applicant as extension was granted up to 15.09.2006. It will not be inappropriate to remind oneself that extension sought for was only up to 31.08.2006, whereas the Court granted extension up to 15.09.2006 and therefore, on that short ground, the appellant-appellant must fail in getting any relief from this Court.
The submission made by applicant that he could not act within the period extended because there was OJ Appeal No.43 of 2005 pending and it was decided that Company Application No.327 of 2006 (praying for extension) will be considered after OJ Appeal No.43 of 2005 is decided, which came to be decided only on 01.08.2008, this makes the case of the appellant-applicant no better, because if the bonafides of the appellant-applicant are to be tested, it has not been placed on record that between 11.06.2006, which was the last date for payment as per the sale confirmation order and 15.09.2006, till which date the extension was granted, any substantial payment was made by the applicant, except making an application to permit him to make payment.
No right is created in favour of the appellant-applicant after 20.06.2011. Whatever rights the applicant is having, are flowing from order dated 22.02.2006. The question which is required to be answered by this Court is whether in light of the clear terms and conditions prescribed in the tender and prescribed order dated 22.02.2006, any right of the applicant survived and the answer of this Court is, 'NO' - no relief can be granted to the appellant-applicant, thus the appeal fails and dismissed.
Directs the Official Liquidator to refund the amount deposited by the appellant-applicant towards sale consideration. The Court makes it further clear that the appellant-applicant will not be entitled to refund of Earnest Money Deposit. It is also made clear that this refund will be without any interest payable thereon. The amount shall be refunded only after the property is put to sale and the sale price is realized by the Official Liquidator.
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2012 (12) TMI 770 - CESTAT, NEW DELHI
Invoking extended period of Limitation - Suppression of facts – Held that:- As decided in HYDERABAD POLYMERS (P) LTD. Versus COMMISSIONER OF C. EX., HYDERABAD [2004 (3) TMI 66 - SUPREME COURT OF INDIA] once the earlier Show Cause Notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available.
As in the present case department had issued a show cause notice dated 28.08.2008 demanding duty for the period from April 2004 to June 2008 invoking extended period under proviso to Section 11A(1) on the ground that the process undertaken by the appellant amounts to manufacture and they had suppressed the relevant facts from the department. On the basis of the same facts the department has issued show cause notice for subsequent period from July 2008 to 4.12.2008 on 6.7.2010 again invoking the extended period, which in view of the Apex Court's judgement in the case of Nizam Sugar Factory (2006 (4) TMI 127 - SUPREME COURT OF INDIA) is not permissible - in favour of assessee.
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2012 (12) TMI 769 - CESTAT, AHMEDABAD
Cenvat credit denied - ISD has availed cenvat credit of the invoices issued by the service provider - Waiver of the pre-deposit of Duty, Interest and Penalty - Held that:- The provisions of Service Tax Rules cannot be invoked for denying the cenvat credit of the input services which were availed by the ISD and distributed. It is undisputed that the ISD has received the services and taken the credit and distributed services to various locations, including current appellant. Thus the appellants have made out a prima-facie case for the waiver of the pre-deposit of the amounts involved.
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2012 (12) TMI 768 - CESTAT MUMBAI
SSI Notification No.8/2003-CE – denial as use of others Brand Name/Trade Name – Penalty - Held that:- As per the provisions of SSE Notification No.8/2003-CE & as decided in CCE, TRICHY Versus GRASIM INDUSTRIES LTD. [2005 (4) TMI 64 - SUPREME COURT OF INDIA] if the goods are manufactured with the brand name which resembles to the brand name registered with the other person, the manufacturer is not entitled for the benefit of the Small Scale Exemption Notification
Admittedly, the brand name PYRO ELECTRIC is registered with M/s. Pyro Electric Instruments Goa Pvt. Ltd. and the applicants are manufacturing goods with the brand name by adding the word INSTRUMENTS the manufacturer assessee is not entitled for the benefit of Notification - the applicants failed to make out a case for total waiver of duty, thus directed to deposit Rs.25,00,000/- within a period of eight weeks & report Compliance.
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2012 (12) TMI 767 - CESTAT, NEW DELHI
Clandestine clearances of M.S. Ingots - Duty Evasion - Penalty u/s 11AC – Held that:- Duty evasion of Rs. 2,49,079/- is based on shortage of 77 M.T. of M.S. scrap vis-a-vis the balance recorded in the RG-23A register. The stock taking had been conducted in presence of Shri S.P. Gupta who accepted the shortage and had even debited an amount of Rs. 1,20,551/- representing the Cenvat credit availed on this quantity. In view of this, the appellant's plea that shortage was not real shortage is difficult to accept. Therefore, the duty demand of Rs. 2,49,079/- based on the presumption that the 77 M.T. of M.S. scrap found short had been used for manufacture of M.S. ingots which were cleared clandestinely without payment of duty appears to be on strong footing.
The appellant have not shown the purchase of scrap/sponge iron valued at Rs. 4,43,89,566/- during November 2008 - January 2009 period is their books of account. Therefore, the department justified in presuming that this scrap/sponge iron was used in unaccounted manufacture of M.S. ingots which were cleared without payment of duty and without issue of invoicing. The fact that the appellant had declared an unaccounted income of Rs.85 lakhs for 2007-2008 to Income tax authorities also indicates that they were having substantial unaccounted sales. The presence of a truck fully loaded with scrap, found in the appellant's factory also indicated that they were purchasing M.S. scrap their principal raw material without any invoices - not a case for total waiver - directed to deposit the balance amount of duty demand i.e. Rs. 70,42,769/- alongwith interest and Shri Jiwan Singla, Director of the appellant company an amount of Rs.4,00,000/- within a period of eight weeks from the date of this order.
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2012 (12) TMI 766 - CESTAT MUMBAI
Repair and Maintenance Service of Government buildings and public roads - seeking waiver of pre-deposit of the Service Tax, interest and penalty - Held that:- In respect of maintenance and repair of public roads and Government buildings are exempted from Service Tax with retrospective amendment made by section 97 and 98 of the Finance Act, 2012.
In respect of the demand of commercial construction, the construction is of administrative block of Municipal Corporation of Chandrapur and out of which certain area is used for commercial purpose and in respect of other demands such as Survey and Map Making services, site formation and clearance, excavation and earth moving and demolition services,this is not a case for complete waiver of pre-deposit. Thus the applicant is directed to deposit Rs.10 lakhs apart from the amount already paid within a period of six weeks & pre-deposit of the remaining amount of Service Tax, interest and penalty shall stand waived and recovery of the same is stayed during pendency of appeal.
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2012 (12) TMI 765 - CESTAT BANGALORE
Rent-a-cab service - Waiver of pre deposit and stay of recovery - Held that: From the terms and conditions of the agreements, it appears that the buses did not fit in the definition of "cab" under Section 65(20) and the transactions between the Corporation on the one hand and the appellants on the other are not to be considered as squarely falling within the ambit of "rent-a-cab" service. Certain factors emerging from the nature of transactions appear to be incompatible with the features of the rent-a-cab scheme - Waiver of predeposit and stay of recovery in respect of the adjudged dues in all these appeals is granted.
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2012 (12) TMI 764 - CESTAT, KOLKATA
Waiver of pre-deposit towards Input Service Credit - CIT(A) remanded the matter back to verify as to where the impugned Capital Goods were used and who paid for the same - Held that:- As decided by in the case of Commissioner vs. Orient Crafts Ltd. (2010 (11) TMI 178 - CESTAT, DELHI) Commissioner (Appeals) dealing with an appeal in relation to Service Tax, is not empowered to remand any matter, but he has to decide the matter by himself, thus Commissioner (Appeals') Order in the present case remanding the matter to the lower Adjudicating Authority is not sustainable, therefore need to be set aside - remanded back to Commissioner (Appeals) to the decide the matter afresh providing a reasonable opportunity of hearing to the Appellant - in favour of assessee by way of remand.
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2012 (12) TMI 763 - ITAT MUMBAI
Re opening of assessment - BAH India as an agent of the USA entity - fees for technical services - Held that:- Although the amount payable by BAH India to the USA entity was debited by BAH India to the profit & loss account and was also claimed as expenses, no RBI approval was obtained for remitting the said amount in foreign exchange as required by relevant provisions of Foreign Exchange Regulation Act during the year under consideration.
As claimed the said amount did not constitute income of the year under consideration for want of the RBI approval as no income chargeable to tax in India could be said to have accrued in the absence of the required approval from RBI reliance placed on the decision of in the case of Kirloskar Tractors Ltd. (1998 (2) TMI 117 - BOMBAY HIGH COURT) wherein held that the approval of RBI having been received in the subsequent years and the relevant amounts also having remitted during those years, liability could be said to accrue or arise in such subsequent years though the same pertained to the earlier years. Reliance has also been placed on another decision of Hon'ble Bombay High Court in the case of Dorr-Oliver (India) Ltd. v. CIT [1998 (1) TMI 42 - BOMBAY HIGH COURT] wherein it was held that collaboration agreement being subject to Government approval, deduction of sum paid as compensation and fees under collaboration agreement was allowable only upto the date till the agreement enjoyed approval by Government of India and not for any subsequent year.
Thus the judicial pronouncements discussed above clearly support the stand of the assessee that income on account of the amount payable by BAH India to the USA entity could be said to have accrued to the said entity only on receipt of the required approval from RBI and there being no such approval received during the year under consideration, the same could not be taxed as income in that year. The decision of the Hon'ble Supreme Court in the case of LIC v. Escorts Ltd. (1985 (12) TMI 289 - SUPREME COURT OF INDIA) thus was rendered in a different context and in a different set of facts and the same cannot support the stand of the Revenue in the present case - delete the additions made on this count by the AO - in favour of assessee.
Method of accounting - royalty and fees for technical services - Held that:- Keeping in view the language so employed in the case of Seamens Aktiengesellschaft (2012 (12) TMI 737 - BOMBAY HIGH COURT) & CSC Technology Singapore Pte. Ltd. (2012 (4) TMI 189 - ITAT DELHI) considering the relevant provisions of DTAA between India and Germany royalty and fees for technical services should be reckoned for taxation only when it is actually received by the assessee and not otherwise - royalty/FTS which had accrued as income to a foreign company, could not be taxed in the source country (being India) unless this amount had been received by the foreign company - thus the amount payable by BAH India to the USA entity could not be brought to tax in India during the year under consideration as fees for technical services as per the relevant provisions of the DTAAs since the same had not been paid to the said entity - in favour of assessee.
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2012 (12) TMI 762 - DELHI HIGH COURT
Unexplained income u/s 68 - CIT(A) deleted the addition - Held that:- An assessee’s duty to establish that the amounts which the AO proposes to add back, u/s 68 are properly sourced, does not cease by merely furnishing the names, addresses and PAN particulars, or relying on entries in a Registrar of Companies website. One must remember that in all such cases, more often than not, the company is a private one, and share applicants are known to it, since they are issued on private placement, or even request basis. If the assessee has access to the share applicant’s PAN particulars, or bank account statement, surely its relationship is closer than arm’s length. Its request to such concerns to participate in income tax proceedings, would, viewed from a pragmatic perspective, be quite strong, because the next possible step for the tax administrators could well be reopening of such investor’s proceedings.
That apart, the concept of “shifting onus” does not mean that once certain facts are provided, the assesse’s duties are over. If on verification, or during proceedings, the AO cannot contact the share applicants, or that the information becomes unverifiable, or there are further doubts in the pursuit of such details, the onus shifts back to the assessee. At that stage, if it falters, the consequence may well be an addition under Section 68.
As decided in A. Govindarajulu Mudaliar v CIT, (1958 (9) TMI 3 - SUPREME COURT) whether a receipt is to be treated as income or not, must depend very largely on the facts and circumstances of each case. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature - Having regard to the totality of facts and circumstances, particularly the remand report, which was not considered by the CIT (A) and the ITAT in its proper perspective, this Court is of the opinion that the question of law requires to be answered in favour of the revenue.
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2012 (12) TMI 761 - ITAT MUMBAI
Non deduction of TDS - shooting of films held outside India - payments made in foreign exchange to overseas services providers - application u/s 195(2) - India - U.K. DTAA - Held that:- This issue is squarely covered in favour of the assessee by the decision of in the case of GE India Technology Centre P. Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] wherein held that if the relevant payment does not contain the element of income taxable in India, the payer cannot be made liable to make an application u/s 195(2).
Merely because some managerial skill is required to render the services, it would not make the services to be managerial services as envisaged in Explanation 2 to section 9(1)(vii). Keeping in view the nature of services rendered by the overseas service providers to the assessee the said services cannot be treated as technical services within the meaning given in Explanation 2 to section 9(1)(vii).
As in agreement with the CIT(Appeal's) that the said services rendered outside India by the overseas service providers in connection with making logistic arrangement are in the nature of commercial services and the amount received by them from the assessee for such services constitutes their business profit which is not chargeable to tax in India in the absence of any PE in India of the said service providers. The requirement of knowledge of local laws on the part of the service providers to render the services such as obtaining the permissions for shooting from the local authorities or for arranging insurance of the crew members and shooting equipments would not change the basic nature of the services which otherwise are commercial services. The assessee, therefore, was not liable to deduct tax at source from the said payments and the AO was not justified in treating the assessee as in default u/s 201 - in favour of assessee.
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