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2017 (3) TMI 1514 - AT - Income TaxTDS u/s 195 - professional fees paid to Mahta Partners, LLC USA a non resident - Royalty payment - DTAA - PE in India - Held that:- The payments made by the assessee are for rendition of these services and not for use of any information concerning industrial, commercial or scientific information”. While characterizing nature of payment what is to be seen is the activity triggering in consideration of which the payment is made. That activity, in the present case, is rendition of services. The fact that in the process of availing these services, the assessee benefits from rich experience of the service provider is wholly irrelevant in the present context. The payment is for rendition of services and not for right to use any information concerning industrial, commercial or scientific experience, in possession of the service provider. In this view of the matter, the authorities below were clearly in error in holding that the impugned payment was covered by the definition of royalty under article 12(3)(a). Coming to the taxability of impugned fees as fees for included services under article 12.4, it is only elementary that such on standalone basis a taxability can arise only when these services “make available” technical knowledge, experience, skill, Know-how or process etc, in the sense that recipient of services is enabled to perform such services, in future, on his own and without any recourse to service provider. It is not, however, the case of the revenue and rightly so, that such a condition is satisfied on the facts of the present case. Learned Departmental Representative fairly accepts that it is not even the case of the authorities below that ‘make available’ clause is satisfied. Thus we uphold the grievance of the assessee. The impugned demand raised under Section 201 r.w.s. 195, accordingly, stand quashed. - Decided in favour of assessee
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