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2023 (10) TMI 1015 - AT - Income TaxDisallowance u/s 40(a) - tds u/s 195 - fee for technical services as liable to be taxable in India as income deemed to have accrued/arisen in India - HELD THAT:- As decided in [2023 (4) TMI 1260 - ITAT DELHI] assessee receives the orders from parties through agents electronically and the goods are dispatched directly to the party with a copy invoice to agents. The role of the agent is for procuring orders/RFQ and getting the payment released from party. When the goods are exported and the payments are released by the party, the agents raise invoice in respect of commission giving complete details of sale invoice, the amount received and its commission. No information in the nature of technical, management or consultancy services had been provided by any of the agent. The assessee had no PE in USA. Both the agents are tax residents of USA and had no business connection in India nor they have any PE in India. None of the agents is related to any of the Director of the company directly or indirectly. All the payments have been made in US$ through proper banking channels. None of the ingredient contained in the definition of “Fees for technical services” as per Explanation 2 to section 9(1)(vii) and/or in Article 12(4) of the India-USA DTAA is found in the impugned payment of commission by the assessee to AM and ETCS. No managerial services or technical services are involved since the non-resident parties (AM and ETCS) were merely commission agents appointed to procure purchase orders for assessee’s products. Further, the impugned payment is not in relation to any services which make available any technical skill or know-how. Nothing of the sort was involved in the assessee’s case. In Mahindra and Mahindra Ltd [2009 (4) TMI 207 - ITAT BOMBAY-H] it has been held that where the payer only obtained the benefit from the services, but did not get any technical knowledge experience or skill in its possession for future use, it cannot be said that technical know-how was made available. Thus the impugned disallowance u/s 40(a)(i) of the Act made by the Ld. AO and confirmed by the Ld. CIT(A) is not sustainable - Decided in favour of assessee.
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