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2019 (3) TMI 330 - AT - Income TaxTDS u/s 195 - default u/s 201/201(1A) - execution of works in Srilanka - services of technical personnel are used in the Installation of Wind turbines - payments made for repair service to Non Resident of Germany - income accrued in India - India-Germany DTAA - neither the Srilankan nor the German entity has any PE in India - The situs/ source of income generating activity - HELD THAT:- Services of technical personnel are used in the Installation of Wind turbines and hence the services rendered by Wind Force Pvt. Ltd. to Regen Power tech for its projects in Srilanka are in the nature of Fee for Technical Services and the payments made to M/s Windforce Private Limited, Srilanka for erection and commission services rendered to customers outside India are also in the nature of Royalty as it involves the payment for the right to use industrial, commercial, or scientific equipment, as the present payment is towards hiring of cranes and hence in the nature of right to use Industrial and as per clause (2) of Article 12 of DTAA, the payments made towards the services rendered by WFPL, Srilanka are liable to withholding tax at 10%. Similarly, on the payments made for repair service to Non Resident of Germany, the Ld CIT(A), inter alia, held, that it is in the nature of FTS, rightly treated as income chargeable to tax in India and hence liable to TDS. Therefore, the AO has rightly levied tax and interest u/s 201(1) & u/s 201(1A) of the Act. Since the assessee provided full turnkey installations for wind power projects for the customers outside India and thus the assessee has fulfilled /rendered its turnkey projects outside India by availing the impugned services. Therefore, its business is not carried out entirely outside India. In the facts and circumstances, we do not find any reason to interfere with the order of the ld CIT(A). The corresponding grounds of the assessee are dismissed. Payment made for purchase of software - royalty as per explanation 4 to section 9(1)(vi) of the Act and as per Article 13(3) of the Indo Denmak DTAA r.w.s 90 - HELD THAT:- The impugned consideration is paid for the purchase of software, it is paid for right to use software and hence such consideration is not royalty. Therefore, we direct the A.O not to treat the assessee in default u/s 201/201(1A) and delete the taxes and interest levied u/s 201 (1A) on this issue. The corresponding grounds of the assessee are allowed. TDS u/s 195 - remittance to M/s Ernst and Young, UAE in connection with a market study for Wind Energy rendered by Ernst and Young in UAE - Indo-UAE DTAA - assessee in default - HELD THAT:- After examination of the definition of market study and provisions of section 9 (1) (vii), the Indo UAE DTAA, the Ld CIT(A) has, inter alia, held, supra, that the market study being in the nature of Technical Services, is in the nature of information concerning commercial experience and hence Royalty. Therefore, the impugned remittances are treated as FTS income in the hands of E & Y and is liable to TDS. Since, the assessee has not placed any material to dislodge the findings recorded by the Ld CIT(A), we do not find any reason to interfere with his order. The corresponding grounds of the assessee fails.
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