Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 167 - AT - Income TaxTDS u/s 195 - remittance towards ‘group cost recharge’ to its associated enterprise(AE) in Singapore was liable to TDS withholding tax - ‘make available’ - provisions made under the DTAA prevaling over the general provision contained in the Income-tax Act - Held that:- The impugned services rendered by INCAT group companies for which the payment was collected by Singapore entity through cost recharge mechanism is not assessable as ‘fee for technical services’ under Article 12 of India – Singapore DTAA when it does not ‘make available’ any technical knowledge, skill, experience, etc. To fit into terminology ‘make available’, the technical knowledge, skill, etc. must remain with the person receiving the services even after the particular contract comes to an end. The technical managerial services etc. offered may be the product of technology and technical knowledge, experience of the service provider would have gone into it but this is not enough to fall within the description of services which ‘make available’ to technical knowledge, etc.. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver of service so that the receiver can deploy the similar technology or techniques in future without depending upon the provider. Therefore, the assessee stands exonerated from its obligation to deduct withholding tax in view of non-application of Article 12 of the beneficial provisions of DTAA. The Hon’ble Supreme Court in the case of Union of India vs. Azadi Bachao Andolan (2003 (10) TMI 5 - SUPREME Court) relied upon by the assessee has upheld the proposition that the provisions made under the DTAA will prevail over the general provision contained in the Income-tax Act to the extent that they are beneficial to the assessee. We also refer to section 90(2) which provides that the provisions of DTAA would override the provisions of Domestic Act in cases where the provisions of DTAA are more beneficial to the assessee. Therefore, we find that the assessee was not under any legal obligation to deduct withholding tax on the impugned remittance. Therefore, we decline to interfere with the order of the CIT(A) and dismiss the appeal of the Revenue. - Decided in favour of assessee
|