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2019 (6) TMI 992 - ITAT DELHITDS u/s 195 - non deduction of TDS on payment made to two non-residents i.e. J2S Inc, USA and Navos B.V.B.A., Belgium - income accrue or arise in India - DTAA between India and USA and DTAA between India and Belgium - CIT(A) treating the “order procurement services” rendered by the non-residents and commission/retainer fee as royalty and fees for technical services - HELD THAT:- In case of the assessee company, two non-resident foreign companies, one by the name of J2S INC, USA and another by the name of NAVOS, Belgium were appointed to locate foreign buyers to whom the assessee company could sale its services. Thus, both the foreign companies rendered order procurement services outside India which is their business activity. Invoices received from the parties also show that services rendered by them were sales procurement services and not fees for technical services or royalties. The contention of the DR that the services provided is in the nature of advisory services based upon the skills of the non-resident, is contrary to the terms and conditions of the agreements. In the previous year relevant to the AY 2012-13 only the retainer fee as per the agreement was paid and no order procurement services in real terms were materialized by the said non-resident. Thus, the Explanation Clause of Section 9 (vii) of the Act will not be applicable on the ground that income was from the source outside India. Both the non-resident assessee derived their income as their business activity and their business profit is determined under Article 7 of DTAA between India and USA as well as from Article 7 of DTAA between India and Belgium and will then decide as to where business income will be taxable. Therefore, none of the provisions of the Section 9 of the Act will be applicable in the present case, business income cannot be treated as fees for technical services as held by the AO. AO as well as CIT(A) was not correct in treating the “order procurement services” rendered by the non-residents and commission/retainer fee as royalty and fees for technical services. Transactions was between India and Switzerland and not between two different non-resident as is in the present case. The order of the CIT(A) is set aside. - Decided in favour of assessee.
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