2021 (10) TMI 356 - Income Tax

Income accrued in India - Rendering services to non-resident entities - Disallowances of consultancy fees and architect fees - non-resident entities have provided technical/consultancy services which enabled the assessee to apply them in its business - whether the payment made by the non-resident entities can be termed as FTS under Article 12(4) of India Singapore Tax Treaty? - whether not only the fees paid comes within the purview of FTS under section 9(1)(vii) of the Act, but also under Article 12(4) of the tax treaty as the services provided by the non residents made available technical knowledge, skill, know-how, process to the assessee to utilize in its business - HELD THAT:- As from the nature of services provided by the non-resident entities and the terms and conditions under which it was provided, it is clear that whatever services were provided are project specific and cannot be used for any other project by the assessee. Further, while providing such services neither any technical knowledge, skill, etc is made available to the assessee for utilizing them in future, independently nor any developed drawing or design have been provided to the assessee which can be applied by the assessee independently. Thus, it is very much clear, the conditions of Article 12(4) of the tax treaty are not fulfilled.

Though, the assessing officer has generally observed that in course of providing services to the assessee, the non-resident entities have made available technical knowledge, know-how, processes to the assessee. However, no substantive material has been brought on record by him to back such conclusion. Even, before us, learned departmental representative has not brought any material to demonstrate that conditions of Article 12(4) have been fulfilled in the facts of the present case. No valid reasons to interfere with the decision of learned Commissioner (Appeals). Accordingly, we uphold the order of learned Commissioner (Appeals) on the issue by dismissing ground raised.