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2019 (2) TMI 2055 - AT - Income TaxTDS u/s 195 - assessee is in the business of brand management, engaged in posting advertisements in the social portal on behalf of their clients - payment made by the assessee to the owner of the search engine - AO held that face book is social networking site, placing advertisements in the social networking sites are patented and provide valuable services, which are essentially technical in nature, receiving such kind of expertise and knowledge from Face Book, Ireland is nothing but technical services rendered by Face Book which clearly attracts the provisions of section 195 and hence tax is deductible @ 10% on the payments to be made - HELD THAT:- As per decision of Google India (P)Ltd. [2018 (5) TMI 896 - ITAT BANGALORE] wherein after referring the Tribunal decisions in the cases of Right Florist P.Ltd., [2013 (4) TMI 338 - ITAT KOLKATA] and Pinstorm Technologies P.Ltd. [2012 (12) TMI 601 - ITAT MUMBAI] Yahoo India (P) Ltd., etc. [2011 (6) TMI 162 - ITAT, MUMBAI] it is held in para 116 that “In all these cases, the assessee was either an advertiser or act on behalf of some other advertiser and has purchased space from the owner of search engine to display its advertisements online. Therefore, the payment made by the assessee to the owner of the search engine was considered to be business receipt/business profit in the hands of the owner of search engine, who is non-resident and in the absence of permanent establishment (PE) in India, the business profits/business receipts received by them were not chargeable to tax in India”. As the assessee is engaged in the business of posting advertisement in the social portal on behalf of their clients. The payments (to be) made for making advertisement in the social portal of M/s. Face Book Ireland Ltd., a non-resident, who is not having a PE in India, on behalf of the assessee’s client M/s. Cholamandalam General Insurance Company Ltd. was not chargeable to tax in India, as held by the Tribunal decisions, supra, and hence, there is no need to deduct tax on such payments. The assessee’s appeal is allowed.
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