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TMI Blog2012 (10) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... n for impugned assessment year showing a loss of Rs. 1,14,27,692/-. During the course of original assessment proceedings, assessee was required to file various details by the Assessing Officer. Such details were filed and assessment was completed accepting the loss. Thereafter, on 28.1.2011, the CIT issued a notice under Section 263 of the Act proposing revision of the order of A.O. According to him, assessee had paid a sum of Rs. 25,11,946/- to one M/s Thin Red Line, United Kingdom, as fees for market development overseas in UK. As per the CIT, provisions of Section 9 of the Act applied and income had to be considered as accruing in India in the hands of the Non Resident. Since no tax was deducted at source as mandated under Section 195 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of "technical services" given under Explanation 2 to Section 9(1)(vii) of the Act. As for the contention of the assessee that market development fees, was not taxable in India, in view of Article 6 of DTAA, CIT was of the opinion that such payments were nothing but fees for technical services, and Section 9(1)(vii) squarely applied. He thus directed the A.O. to revise the assessment considering the original assessment erroneous and prejudicial to the interests of Revenue. 4. Now before us, learned A.R. strongly assailing the orders of authorities below, submitted that in the first place what was paid by the assessee to M/s Thin Red Line UK was market development fee and not fees for technical services. According to him, admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia for taxing such amount under Section 9(1)(vii) of the Act. According to him, this position was clear in view of the explanation added to Section 9 by Finance Act, 2010 with retrospective effect from 1.6.1976. 6. We have perused the orders and heard the rival submissions. Relevant question to be decided, in our opinion, is not whether the payment made by the assessee to M/s Thin Red Line UK was fee for market development overseas or fee for technical services. No doubt, this issue has not been discussed by the Assessing Officer in the assessment order at all. The question is, even if we consider it as fee for technical services, would it be taxable in India in the hands of M/s Thin Red Line UK. Section 9(1)(vii) of the Act, which specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".]" 7. Here, if we consider the amount paid by the assessee as fee for technical services, it would fall under clause (b) above. Such clause clearly mentions exclusion of fees that are payable in respect of services utilized in a business or profession carried on by such person outside India or for the purpose of making an earning any income from any source outside India. Hon'ble Bombay High Court in the case of Grasim Industries Ltd. (supra) relied on by the learned A.R., had clearly mentioned that the expression "by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received; or (c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design." Giving marketing services outside India, even if we consider it as technical services, nothing was made available to the assessee in the nature of any technical knowledge, experience, skill know-how or processes. There was no development or transfer of any technical plan or technical design. CIT in his order under Section 263 has not pointed out any sort of similar transfer or any sort of technical knowledge being made available to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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