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2011 (7) TMI 1108 - AT - Income TaxIncome accrued in India - Remittances of conferanace Expenses paid to Non - Resident - Tax Deducted at Source u/s 195 - Consequences of failure to pay u/s 201/201A- "Consultancy services" - technical nature - Article 12 of Indo-US Tax Treaty - AO observed that before making payment to non-resident, the assessee-company had not deducted tax at source as required by section 195 - HELD THAT:- Nature of services rendered by non resident company to the assessee-company is such that the same cannot be regarded as technical or consultancy services so as to fall within the definition of "fees for included services" as given in Article 12 of the Indo-US Tax Treaty. The payment made for the said services, thus, is in the nature of business profits in the hands of non resident company as covered under Article 7 of the Treaty and the said party admittedly having no PE in India in the year under consideration, the same was not chargeable to tax in its hand in India. Consequently, the assessee-company was not liable to deduct tax at source from the said payment made to non resident company and no liability could be fastened on it under section 201/201(1A). We, therefore, reverse the impugned order of the ld. CIT(A) upholding the order passed by the Assessing Officer on this issue under section 201/201(1A) and allow the appeal of the assessee - Decision in favour of Assessee. "Fees for included services" under Article 12(4) of the DTAA - Remittances made to the CROs - Assessee paid fees to CROs (Non- resident entities) in respect of bio-equivalence studies, clinical/analytical charge - HELD THAT:- In the case of ANAPHARM INC., IN RE [2008 (9) TMI 27 - AUTHORITY FOR ADVANCE RULINGS], a similar issue had come up wherein the non-resident assessee had received similar payments from Indian pharma companies for providing services of CROs and the question was whether the said payments are taxable in India AND held services rendered by the non-resident assessee as CROs were not for fees for included services as they did not make available any technology to the recipient. Therefore, we are in the view that the nature of services rendered by CROs to the assessee-company is such that the same cannot be regarded as technical or consultancy services so as to fall within the definition of "fees for included services" and the payment made for such services, therefore, was not chargeable to tax in India in the hands of the concerned CROs. Consequently, the assessee-company was not liable to deduct tax at source from the said payment made to CROs and no liability could be fastened on it under section 201/201(1A) - dismiss the appeal filed by the revenue.
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