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2018 (10) TMI 2024 - AT - Income TaxTDS u/s 195 - addition u/s 40(a)(i) - assessee has paid in foreign currency, a sum as export commission, on which no tax was deducted at source - Scope of MFN clause available in the Protocol of Indo-Belgium DTAA - as submitted as per the Indo Belgium DTAA – Article 12, the payment related to the managerial services was categorized as “fees for technical services” and was taxable in the other contracting state - HELD THAT:- Though the CIT(A) noted that the definition of the term “fees for technical services” under the treaty between India and Belgium includes services of managerial nature, having regard to the MFN clause in the India-Belgium Treaty, the restrictive definition of the term “fee for technical services” in the India-UK Treaty can be applied and by following various decisions as referred hereinabove, CIT(A) held that the payment made to SG Exprover cannot be considered to partake of the nature of “fees for technical services” and allowed the ground raised by the assessee without obtaining any comments from the AO. We direct the Assessing Officer to examine the MFN clause available in the Protocol of Indo-Belgium DTAA as to whether the same shall override the specific provisions laid down under Article 12 and decide the issue afresh in accordance with law. Thus, the ground raised by the Revenue is allowed for statistical purposes. Cross objection - contention of the assessee is that the only service rendered by the SG Exprover is procurement of export orders for the assessee and the payments made to them are only commission for procurement of export orders and therefore, the ld. CIT(A) erroneously held that the services rendered by SG Exprover is managerial services - By considering the materials furnished by the assessee, it was the observation of the Assessing Officer that the services rendered by the assessee are in the nature of managerial services in view of the Article 12 of the Indo-Belgium DTAA and the ld. CIT(A) found considerable merits in the above observations. Thus, we find no infirmity in the order of the ld. CIT(A). Accordingly, the ground raised in the Cross Objection stands dismissed.
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