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2012 (7) TMI 795 - AT - Income TaxNon deduction of tax at source - remittances to a non-resident company incorporated in Hongkong - services rendered by M/s SEL, NRI company to the assessee company are technical, managerial or consultancy as per sec. 9(i)(vii) - Held that:- The agreement between the assessee and NRI company stipulates that it shall be responsible for the shipment of raw material to the assessee from its importers within the stipulated time and as per the specific quality and quantity - it is the assessee, in the consultation with its exporters, which identifies the manufacturer and the quality and the price of the material to be imported. Therefore, SEL nowhere is involved in the above identification of the exporter or in selecting the material and negotiating the price, thus it cannot be said that SEL is rendering any of the consultancy services. As the quality of material is already determined by the assessee and the SEL is only to make a physical inspection of the material to see if it resembles the quality specified by the assessee it is thus not much of technical knowledge is required in it.SEL is not required to employ any skilled technical personnel to discharge its obligation under the agreement and, therefore, we hold that the assessee is not discharging any technical services - it is seen that SEL is acting on behalf of the assessee as its agent and there is no independent application of thought process in any of the activities to be carried out by SEL no managerial services being rendered by SEL to the assessee - above payments do not fall within the ambit of fee for technical services and, therefore, the provision of sec. 195(1) is also not attracted - in favour of assessee.
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