Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 585 - AT - Income TaxTDS u/s 195 - payments made by to parent company, Bain & Company Inc. (Bain US) on account of payments made to third parties - technology was ‘made available’ to the appellant and hence tax was required to be deducted on these payments under Article 12 of India-USA Double Tax Avoidance Agreement (‘DTAA’) - whether there is no evidence that such expenses were reimbursement of expenses on a cost to cost basis? - whether services were not ‘technical’ services so as to fall within the ambit of FIS under the India- USA DTAA.? - HELD THAT:- CIT(A) has only held that technical services were made available to the assessee, but, he is silent on whether technology was made available to the assessee or not which, in our opinion, is a sine qua non for holding payment as FIS under the Indo-USA DTAA. Further, the submission of the ld. Counsel that services were rendered outside India and, therefore, payments for the services could not qualify as fee for technical services in view of the decision of the Hon’ble Supreme Court in the case of Ishikawajima-Harima Heavy Industries Ltd. [2007 (1) TMI 91 - SUPREME COURT] which was applicable at the relevant time, could not be controverted by the ld. DR. We find, the Hon’ble Supreme Court in the case of Ishikawajima-Harima Heavy Industries Ltd. (supra) has held that for a nonresident to be taxed in India, two events need to be fulfilled i.e., not only should the services be utilized in India, but, the same should also be rendered in India. We find, the above proposition was amended retrospectively by the Finance Act, 2010 with retrospective effect from 1st June, 1976. Therefore, we find merit in the argument of the ld. Counsel that it was under a bona fide belief that the payments were not taxable in India. We find, the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd. [2021 (3) TMI 138 - SUPREME COURT] has thoroughly discussed the issue regarding royalty under the Income-tax Act and has held that a person ‘mentioned in section 195 of the Income-tax Act cannot be expected to do the impossible, namely to apply the expanded definition of ‘royalty’ inserted by Explanation 4 to section 9(1)(vi) of the Income-tax Act for the assessment years in question at a time when Explanation was not actually and factually in the statute.’ We are of the considered opinion that the assessee was not liable to withhold tax payment on account of the four items the details of which are given at para 12 of this order. Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed.
|