Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1309 - AT - Income TaxTaxability of the management fee received as fees for technical services - India–Singapore DTAA - business profit or FTS - nature of management fee earned from its Indian subsidiary DDIL - Existence in PE in India - HELD THAT:- The AO while completing the proceedings for the assessment year 2011–12 in pursuance to the directions of the Tribunal [2017 (5) TMI 720 - ITAT MUMBAI] and Hon'ble Jurisdictional High Court [2018 (7) TMI 1256 - BOMBAY HIGH COURT] has also held that the management fee received by the assessee is in the nature of business profit and not fees for technical services. Therefore, following the decision of the Tribunal in assessee’s own case for the assessment year 2012–13 and 2013–14 [2018 (12) TMI 57 - ITAT MUMBAI] we hold that the management fee received by the assessee from DDIL is not in the nature of fees for technical services but business profit. Having held so, it is necessary to examine whether such business profit is taxable in India. In this regard, the contention of the learned Authorised Representative is, as per Article–5(6)(b) of India–Singapore Tax Treaty if the employees of the assessee for rendering services to the AE in India for a period of more than 30 days, it will constitute PE. He submitted, in the relevant previous year, only two employees of the assessee have stayed in India for rendering services for 18 man–days and 15 solar–days. Thus, he submitted, in neither of the cases, the stay of the employees in India has exceeded 30 days. That being the case, no PE existed in India to bring to tax the business profit earned by the assessee. In our view, the aforesaid claim of the assessee has neither been considered by the Assessing Officer nor by learned DRP, as; they have treated the management fee received by the assessee as fees for technical services. In view of the aforesaid, we direct the Assessing Officer to examine assessee’s claim that there is no PE in India in terms of Article–5(6)(b) of the India–Singapore Tax Treaty. In case assessee’s claim is found to be correct, no part of the management fee would be taxable in India. Therefore, subject to the aforesaid verification, the grounds raised are allowed. Interest u/s 234B - HELD THAT:- As decided in favour of the assessee by the Tribunal while deciding assessee’s appeals for the assessment years 2011–12, 2012–13 and 2013–14. While deciding the issue, the Tribunal has held that liability to pay advance tax is not on a non–resident as the liability is on the payer to deduct tax at source under section 195 of the Act while making such payment. Following the decision of the Co– ordinate Bench in assessee’s own case, we hold that interest under section 234B is not chargeable.
|