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2010 (7) TMI 1081 - ITAT MUMBAIIncome taxable in India - Remittances of conference expenses - liability to deduct tax at source - DTAA between India and USA - PE In India - HELD THAT:- We are of the view that the nature of services rendered by CKP to the assessee-company is such that the same cannot be regarded as technical or consultancy services so as to fall within the definition of "fees for included services" as given in Article 12 of the Indo-US Tax Treaty. The payment made for the said services, thus, is in the nature of business profits in the hands of CSK as covered under Article 7 of the Treaty and the said party admittedly having no PE in India in the year under consideration, the same was not chargeable to tax in its hand in India. Consequently, the assessee-company was not liable to deduct tax at source from the said payment made to CSK and no liability could be fastened on it u/s 201/201(1A). We, therefore, reverse the impugned order of the ld. CIT(A) upholding the order passed by the AO on this issue u/s 201/201(1A) and allow the appeal of the assessee. TDS u/s 195 - Remittances made to the non-resident - nature of services rendered by CROs - liability u/s 201/201(1A) - assessee, here is a pharmaceutical company having in-house research facility generic drugs developed by the assessee-company are, therefore, sent for testing at the laboratories of CROs abroad. CROs conduct test and experiments on these drugs and send back analysis report containing results of such test and experiment - HELD THAT:- As rightly observed by the ld. CIT(A), the CROs, thus, use their own skills, equipments, etc., to prepare the report - what they ultimately supply to the assessee-company is the analysis report and there is no parting with their skills and know-how to the assessee-company. The services rendered by CROs, thus, are not technical in nature but are merely in the nature of commercial services. The fees paid for such services, in our opinion, therefore, does not amount to fees paid for technical services or fees paid for making available any technology to the assessee-company in order to enable to apply the same for developing/inventing new drugs in future. We are of the view that the nature of services rendered by CROs to the assessee-company is such that the same cannot be regarded as technical or consultancy services so as to fall within the definition of "fees for included services" and the payment made for such services, therefore, was not chargeable to tax in India in the hands of the concerned CROs. Consequently, the assessee-company was not liable to deduct tax at source from the said payment made to CROs and no liability could be fastened on it u/s 201/201(1A). We, therefore, uphold the impugned order of the ld. CIT(A) giving relief to the assessee on this issue and dismiss the appeal filed by the revenue.
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