TMI Blog2015 (4) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... and find that the Assessing Officer has not given any finding as to how data storage charges paid by the assessee are falling either under royalty or fees for technical services so as to deduct TDS on such payments made to non-resident outside India. In the circumstances, we uphold the order of the Commissioner of Income Tax (Appeals) in deleting the disallowance and reject the grounds raised in all the appeals of the Revenue on this issue. Deduction u/s 10B of Income Tax Act, 1961 - As could be seen from the definition of 100% EOU, in order to be 100% export-oriented undertaking and claim exemption under section 10B, an undertaking must have been approved by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 and the rules made under that Act. In this case, the assessee is a unit recognized by the STPI. Nothing is placed on record to suggest that this is a hundred percent export oriented undertaking approved by the Board appointed by the Central Government under section 14 of the Industries (Development and Regulation) Act, 1951. An identical situation arose in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the departmental grounds of appeal for the above assessment year was received by us on 23.11.10 and the cross objection ought to have been filed within 30 days from the date of receipt of order i.e. on or before 3.12.2010. However, the cross objection is being filed on 9.12.2013 resulting in a delay of 1101 days. I state that the delay is neither willful nor deliberate but to unavoidable circumstances. I state that this grounds of objection raised on account of additional grounds of appeal filed by department on 11.3.2013. The Delhi High Court had reviewed their decision and the assessee became aware of the same only in 2nd week of August, 2013. The assessee approached their advocates and it was decided to file cross objection to additional ground raised by department. The delay in filing cross objection from the date of filing of original grounds of appeal by the department is only because of the department has filed addition grounds on 11.3.2013 and the assessee was aware of the review of Delhi High Court decision only in 2nd week of August, 2013. It is prayed that in the interest of justice, the delay in filing cross objection may be condoned and grounds of cross o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of website and not for usage of any machines. It is only for the use of server outside India and is not taxable in India and hence tax need not be deducted at source. Therefore these amounts cannot be disallowed under section 40(a)(i) of the Act. He further submits that management of server installed in USA would constitute permanent establishment of the assessee in USA and both profit and expenditure incurred in USA should not be brought to tax in India. He also submits that the nonresident, INetU is situated in USA and they have no permanent establishment in India and hence are not subject to income-tax in India. Counsel submits that hosting charges is not royalty. He places reliance on the decision of Mumbai Bench of this Tribunal in the case of ITO Vs. People Interactive (I) P.Ltd. in ITA Nos. 2179 to 2182/Mum/2009 dated 29.02.2012. He also submits that these payments do not fall under fees for technical services. He submits that nonresident does not make available any technical knowledge and hence cannot be termed as fees for technical services. He places reliance on the following decisions in support of his contentions:- i) CIT Vs. De Beers Minerals India P.Ltd. (346 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 632 (Mad) CIT v. Vijay Ship Breaking 314 ITR 309 (SC) 5.3 I have considered the facts of the case and the submissions of the Id. AR. I have also gone through the decisions relied on by the AO and AR. As pointed out by the Id. AR, the amount paid to the non-resident is towards hiring of storage space. The payment has been made to a person whose business is to make available storage space to various parties. Therefore.the payments made to the non-resident only constitutes its business income. The business income earned by a non resident who does not have a Permanent Establishment (PE) in India cannot be taxed in India as per DTAA between USA and India. I also find merit in the alternate ground raised by the appellant in respect of the nondiscrimination clause under the DTAA between India and USA. The Article 26(3) of the DTAA is clearly against any discrimination against the non-resident, whereby any payment to the non-resident is not allowed as a deduction in computing the income of the resident payer. The decisions of the Delhi Bench of the ITAT in Herbalife International (Supra) and MilleniumInfocom (Supra) also support the appellant's case. Since, similar payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principally had domestic business in its DTI unit. STPI unit does not have any new computer system and other necessary equipmentsfor the purpose of carrying on software development. The Assessing Officer was of the view that the assessee used computers relating to its DTI unit situated in the building at Sarangapani Street, T.Nagar, Chennai. The Assessing Officer was of the view that additions of new computer system and regular employees were recruited for the STPI unit after STPI unit was shifted to a new building located at Habibullah Road, T.Nagar, Chennai. The Assessing Officer was of the view that assessee has used computers belonging to its DTI unit for development of software, therefore not eligible for exemption under section 10B of the Act. He was of the view that assessee has not hired building where STPI is said to have been situated and therefore denied exemption under section 10B of the Act. On appeal, Commissioner of Income Tax (Appeals) allowed exemption claimed by the assessee observing that assessee had purchased new computers for STPI unit which is located at 2nd floor of No.2, Sarangapani Street and the entire floor is only STPI unit. Commissioner of Income Tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 DTR 24). 13. Counsel for the assessee places reliance on the order of the Commissioner of Income Tax (Appeals) and further referring to pages 1 to 6 of the paper book which contain application for green card, copy of green card, sample invoices and submits that STPI unit was situated in 2nd floor of Sarangapani Street, T.Nagar, Chennai and this is an independent unit and it is nothing to do with the DTI unit situated at first floor. He submits that STPI permitted the assessee to conduct its business from the second floor. He further submits that all the computers were delivered in the address given in the second floor where STPI unit is located and all these invoices were produced before the Assessing Officer as evidenced from the remand report also. Therefore he submits that claim made by the assessee under section 10B is in order. The assessee also filed cross objection claiming that in case deduction under section 10B is not allowable, claim for relief under section 10A should be considered as the assessee satisfies all the conditions of section 10A of the Act. The counsel for the assessee placing reliance on the very same decision relied on by the Revenue in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on record by the assessee from the Board appointed by the Central Govt. 16. The alternative plea in the cross objection filed by the assessee is that the assessee undertaking should be considered for deduction under section 10A of the Act as it satisfies the conditions laid down under section 10A of the Act. The assessee in its submissions before the Commissioner of Income Tax (Appeals) stated that it satisfies the requirement of relief under section 10A of the Act. Commissioner of Income Tax (Appeals) extracted the submissions in his order at page 5 6 as under:- The requirement of relief under section 10A are satisfied: 1. STPI approval has been obtained in respect of an identifiable separate space. 2. The business of the STPI was new and different from the existing contracts of the Domestic Tariff unit. 3. The profits claimed as exempt under Sections.10a relates to the new export business carried on the STPI unit after the approval of the same as a STPI unit. 4. Only new machinery, not used before for any other purposes were used in the STPI business. Lease/hire of the machine by the assessee to himself cannot be considered as used for any other purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
