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2011 (11) TMI 507 - AT - Income TaxFees for technical services - reimbursements of expenses incurred for conducting market research to non resident deemed as fees for technical services – liability of TDS – assessee treated as agent of non- resident - Held that:- There was only a reference to the use of some of the aspects of LDV's product in the existing product of the assessee subject to certain change. This was only a business plan. The content of the note refers to market research and market research on acceptability of possible market for LDV products. Thus what was done was only market research. Also from research report of LDV's office at UK it was found that there was availability of Niche market for high Mini Buses and Vans in India. We fail to see how the CIT(A) based on the note referred to in his order can conclude that LDV provided technical assistance in improving the quality of Assessee's mini bus and move fully engineered minibus Payment in question was a reimbursement of expenses and was not in the nature of FTS as contended by the revenue. The law is well settled that in respect of reimbursement of expenses there is no obligation to deduct tax at source. Since the remittances by the assessee are not chargeable to tax in the hands of the Non- resident. Consequently the assessment of the sum in question in the hands of the assessee as agent of non-resident is held to be not correct - in favor of assessee.
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