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2022 (9) TMI 601 - Income Tax
Income deemed to accrue or arise in India - Management Support fees received pursuant to an Agreement with Indian entity, for rendering services in the nature of Commercial, Management, Marketing and Administrative - assessee is a non-resident company incorporated in Sweden - as claimed that this amount was not chargeable to tax because of the Double Taxation Avoidance Agreement (DTAA) between India and Sweden read with the DTAA between India and Portuguese - HELD THAT:- The assessee rendered Managerial Support Services to its Indian entity. It claimed the benefit of Most Favoured Nation (MFN) clause contained in Protocol to India-Sweden DTAA, in turn, relying on India-Portuguese DTAA and claimed that the amount was not chargeable to tax. Per contra, the AO followed the orders passed by the DRP for earlier years deciding the issue in favour of the Revenue. It is seen that the subject matter under consideration came up for consideration before the Tribunal for the immediately preceding assessment year 2016-17 [2021 (6) TMI 667 - ITAT PUNE] following its order for earlier years, has held that the amount received by the assessee towards Management Service fees is not chargeable to tax. DR fairly accepted the position. Thus we overturn the impugned order and direct not to include amount in the assessee’s total income. These grounds are allowed.
Income received towards Human Resources services and Leadership Seminar and Conference services provided to its Indian entity by treating it as ‘FTS’ - Scope of "Fees for Included Services” - assessee claimed the amounts as not chargeable because of India-Portuguese DTAA - HELD THAT:- Leadership training receipt has been specifically held to be not chargeable to tax in the light of Article 12(4)(b) of the DTAA between India and Portuguese. However, we find that for the year under consideration there is some overlapping in the receipts from HR services and Leadership Training.
Assessee as placed on record certain additional evidence which, inter alia, is required to be examined afresh to precisely determine the nature of HR services, we consider it expedient to set aside the impugned order on the issue of Leadership training and HR services. We order accordingly and remit the matter to the file of the AO for examining if both the receipts are covered under Article 12(4)(b) of the DTAA between India and Portuguese. AO will examine the details of the receipts under both the heads for evaluating if such receipts, other than Leadership training, are covered under Article 12(4)(b) of the DTAA between India and Portuguese for determining their taxability or otherwise. Ground allowed for statistical purposes.