TMI Blog2005 (2) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... tax from them. Consequently, it is not an assessee-in-default u/s 201. Therefore, interest u/s 201(A) is not chargeable. Since the assessee has not made application u/s 195(1) of the Income-tax Act to the Department, all the payments made by the assessee that are found liable for TDS on the entire lump-sum payment. Thus, we hereby find that all the issues raised by the assessee on merits are accordingly answered. Admittedly, the assessee has not furnished the required details while filing the return for the year corresponding to the GDR issue in question, keeping vacant the relevant Column No. 6 available in the return. Therefore, the aspect of when the limitation starts in the absence of any specific direction given in the statute and it will not start unless the taxing authorities came to the knowledge of said issue. It is the contention of the Department that soon after it came to know the issue, they have issued show-cause notice stated supra and hence, the assessee could not show that the Department has committed any deliberate delay or it has not taken action within reasonable time in the absence of any specific time laid down by the statute. Thus, we find that this contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st charged by the Assessing Officer under section 201(1A). 6.0 That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) was not justified in considering that the reimbursement of expenses and payment made directly to third party, would constitute part and parcel of the consideration to the Lead Managers and thus tax has to be deducted at source on the said payment also. 7.0 That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) was not justified in not considering the ground that tax is not deductible on various payments made to other foreign entities other than the Lead Managers aggregating to Rs. 20 lacs (approx.) 8.0 That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) was not justified in concluding that amounts retained by the Lead Managers were in the nature of fees for technical services within the meaning of Article 113 of the DTA Agreement between India and U.K." 3. Both parties were heard regarding the issues raised by assessee in this appeal and its legal implications. 4. On careful consideration of the material made available with the Tribunal and analysing the same in the light of the arguments advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement. Thus, proceeds amounts of Rs. 2,44,68,60,000 credited to ANZ Grindlays Bank, Mumbai, on 3-12-1993 in the name of the assessee. The assessee has reimbursed the following expenses : Sl. No. Particulars Amount(Rupees) 1. Reimbursement of Expenses to RFC IFC 95,81,271 2. Payment to Bankers Trust Co., London 4,38,150 3. Payment to Bankers Trust Co., London, towards trusteeship fees, etc. 8,76,065 4. Payment to Bankers Trust Co., Luxembourg, Stock Exchange 6,85,654 Total 1,15,81,140 6. While filing the return for the relevant period, the assessee has not mentioned/informed about the Column No. 6 provided in the return. Therefore, the Department has taken the matter immediately when it came to the notice that no TDS has been effected on the money paid for availing the certificate relating to GDR issue, by issuing notice dated 5-1-1999 requiring the assessee to show-cause as to why taxes were not deducted on the amount paid to the Lead Managers of GDR issue at source under section 195 of the Income-tax Act. The assessee has filed its explanation on 24-11-1999 to the said notice. After hearing the assessee and considering the explanation, the Assessing Officer passed order under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what was paid to them cannot be considered as purchase price of the finished packages . (3)The services rendered by the lead managers/managers in connection with the GDR issue fall within the definition of technical services under section 9(1)( vii ) of the Income-tax Act, 1961, r.w. Explanation 2 thereto. These services are managerial or consultancy services. The management commission and selling concession/commission are therefore income of the lead managers/managers deemed to accrue or arise in India and accordingly, the assessee-company was liable to deduct tax under section 195(1). However, the underwriting services are not technical services. Therefore the underwriting commission does not fall within section 9(1)( vii ), in so far as it relates to the issue of GDRs outside USA. The assessee-company was not therefore liable to deduct tax therefrom under section 195(1). As regards the GDRs issued in USA to qualified institutional buyers, there was no underwriting and therefore what was paid as underwriting commission was not in fact so and therefore this part of the payment would be income by way of fees for technical services deemed to arise or accrue in India within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Rs. 8,76,065 and Rs. 6,85,654 are all payments for services rendered as they were admittedly paid towards fees and they arise in India and thus liable to be deducted tax at source under section 195. However, in view of DTA with UK is applicable and these payments will not fall within the definition of fee for technical services under section 134( c ) and hence they are not taxable in India and assessee is not liable to deduct tax from them. Consequently, it is not an assessee-in-default under section 201. Therefore, interest under section 201(A) is not chargeable. 12. Since the assessee has not made application under section 195(1) of the Income-tax Act to the Department, all the payments made by the assessee that are found liable for TDS on the entire lump-sum payment. Thus, we hereby find that all the issues raised by the assessee on merits are accordingly answered. 13. The assessee has also raised specifically that the order against the assessee under section 201 is barred by limitation. On careful analysis in the provisions contained in section 201 and other connected relevant provisions, we find that the statute does not prescribe any time for passing any order under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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