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2009 (8) TMI 973 - AT - Income TaxTDS u/s 195 - Liability to deduct tax at source - "make available" clause - DTA Agreement for logistics services - Nature of services - Whether logistics services agreement is `fees for technical services' as per article 12(4) of the Double Taxation Avoidance Agreement between India and Singapore - whether the assessee was liable to deduct tax at source in view of the logistics services agreement entered between the assessee and Sun Singapore - appellant entered into an agreement for availing of the logistics services from Sun Singapore - all the payments were in respect of spare parts only - CIT (A) held that the nature of services are such that it makes available technical knowledge, experience, skill, know-how and processes to the appellant and also enables it to apply the technology contained therein. The services are therefore covered under article 12(4) of the Double Taxation Avoidance Agreement and therefore, the payment is fees for technical services liable for tax deduction. HELD THAT:- Following the decision of the Bangalore Bench in the case of ITO v. Cepha Imaging P. Ltd.[2009 (7) TMI 1277 - ITAT BANGALORE] and other decisions referred, we hold that the interpretation of the word "make available" as given in memorandum of understanding between India and USA treaty can be applied in the instant case and as per the facts on record, it has not been established by the Revenue that the technology, experience or skill has been made available to the assessee. Hence, as per article 12(4) of the DTA Agreement between India and Singapore, the payments made by the assessee were not liable to be taxed under the head "Fees for technical services". Sun Singapore is not having any permanent establishment and therefore, the payments which were required to be taxed under the head "Business" were not taxable in view of article 7 of the DTA Agreement between India and Singapore. The Hon'ble jurisdictional High Court in the case of Jindal Thermal Power Co. Ltd. v. Deputy CIT (TDS) [2009 (3) TMI 401 - KARNATAKA HIGH COURT] held that rendering of services and utilisation should be both in India and the Explanation to section 9(2) does not dilute such requirements as laid down by the apex court in Ishikawajima-Harima Heavy Industries Ltd.'s case [2007 (1) TMI 91 - SUPREME COURT] though the Explanation has been introduced subsequently. It was held that technical services provided off-shore does not require any deduction of tax at source. In the instant case, the services have been rendered off-shore though these are utilised in India and as per the decision of the jurisdictional High Court, no TDS was required to be made. It is true that through e-commerce, the services can be rendered in India without any geographical boundary but no facts have been put before us to establish that Sun Singapore provided such services in India. When the income of the recipient is not taxable in India then the appellant was not required to deduct tax at source. Hence, it is held that the appellant was not required to deduct tax at source u/s 195. In the result, both the appeals of the assessee are allowed.
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