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2013 (2) TMI 431 - AT - Income TaxIndia Germany DTAA - payment made to Pehla Testing Laboratory (Pehla) Germany towards type tests - whether the payment made to Lab in Germany for carrying out certain tests on circuit breakers manufactured by assessee for the purpose of certification so as to meet the international standard falls within the meaning of fees for technical services and is taxable within the meaning of section 9(1)(vii)? - Held that - Assessee before the AO after drawing his attention to the flyer received from the Pehla had categorically pointed out that the standard service provided by the PTL is without any human intervention. This factor has not been disputed by him. Even before the CIT (A) this contention has been deposed again by the assessee. None of the authorities have either rebutted this contention of assessee or has given any adverse remark or findings that there was any human intervention in the process. CIT (A) as well as AO have gone merely by the fact that such a type testing services provided by the PTL is highly sophisticated and technical and it cannot be considered as non technical. The CIT (DR) had argued that for observing the process preparing the report issuance of certificate and for monitoring of machines human involvement is definitely there therefore it cannot be held that there is no human intervention. This cannot be the criteria for understanding the term technical services as contemplated in Explanation 2 to section 9(1)(vii). If any person delivers any technical skills or services or make available any such services through aid of any machine equipment or any kind of technology then such a rendering of services can be inferred as technical services . In such a situation there is a constant human endeavour and the involvement of the human interface. On the contrary if any technology or machine developed by human and put to operation automatically wherein it operates without any much of human interface or intervention then usage of such technology cannot per se be held as rendering of technical services by human skills. It is obvious that in such a situation some human involvement could be there but it is not a constant endeavour of the human in the process. Merely because certificates have been provided by the humans after a test is carried out in a Laboratory automatically by the machines it cannot be held that services have been provided through the human skills. Therefore the contention raised by the learned CIT (DR) does not appeal much . Thus if a standard facility is provided through a usage of machine or technology it cannot be termed as rendering of technical services. Once in this case it has not been disputed that there is not much of the human involvement for carrying out the tests of circuit breakers in the Laboratory and it is mostly done by machines and is a standard facility it cannot be held that Pehla Testing Laboratory is rendering any kind of technical services to assessee. Thus to hold that payment made by assessee to the PTL in Germany is not in consideration for rendering of any kind of technical services either in the nature of managerial or technical or consultancy services. Therefore it does not fall within the ambit of section 9(1)(vii) - in favour of assessee.
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