TMI Blog2015 (9) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that no purpose would be served by referring to Article 12 of India-Singapore DTAA to see whether such payments are taxable or exempt. Assessee was not required to deduct tax on the impugned payments - Decided in favour of assessee. Condonation of delay - revenue challenged condoning of delay by Commissioner of Income Tax (Appeals) in filing of appeal u/s. 248 - Held that:- The Commissioner of Income Tax (Appeals) observed that there is no negligence or laxity on part of the assessee in preferring appeal, the delay was caused because of wrong advice given by the professionals. It is a well settled law that condonation of delay should be a rule and denial an exception. It is not the length of delay which matters but the reason for delay in filing of the appeal which is of prime importance. The Courts have been taking liberal view in condoning substantial delay where the delay has been explained. On the other hand, minor delay in filing of the appeal is not pardoned where it has not been sufficiently explained or delay is attributable to utter negligence or lackadaisical attitude of appellant. The Commissioner of Income Tax (Appeals) after taking into consideration the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable in India as per DTAA between India and Thailand by only considering that as per Article 14 of DTAA, the recipient was not present in India for more than 183 days, without appreciating that the recipient is a company and not individual and that Article 14 dealing with Independent Personal Services is not applicable to the case here. 5) The Learned CIT(A) did not examine the facts as to whether provision of Consultancy Services by the recipient constituted Permanent Establishment under Article 5(2)(j) and also did not consider the duration of services as per the agreements covering various stages starting from Preliminary Study, to Conceptual Design Stage, Schematic Design stage, Design Implementation stage, Construction documents Review stage which showed that the involvement of the two companies is extensive and involves meetings, visits by personnel of the vendor to the assessee's site and office in India over the various stages and duration is more than 183 days in aggregate. 6) The Learned CIT(A) erred in not considering the taxability of income from consultancy services as business income as per Article 7 or as technical services as other income as per Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue are in appeal before the Tribunal. 3. Shri Kishor Phadke appearing on behalf of the assessee submitted that the Commissioner of Income Tax (Appeals) has erred in coming to the conclusion that the services rendered by Andy Fisher Workshop Pte. Ltd. and FBEYE International Pte. Ltd., Singapore are taxable in India under the head fees for technical services . The ld. AR contended that the Singapore parties have not transferred any technical know-how or technical designs to the assessee. The architectural designs provided by the foreign companies are project specific. There has been no transfer of make available technical know-how. Therefore, the payments made do not fall under the category of payment of royalties or fees for technical services. The ld. AR further placed reliance on Article 12 of the India- Singapore DTAA. The ld. AR in support of his contention placed reliance on the following case laws: i. Bangkok Glass Industry Co. Ltd. Vs. Assistant Commissioner of Income Tax reported as 257 CTR (Mad) 326. ii. Romer Labs Singapore Pte. Ltd. Vs. Assistant Director of Income Tax (International Taxation) reported as 22 ITR (Trib) 224 (Delhi). iii. Bharat Petr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 12(4). The Commissioner of Income Tax (Appeals) has also drawn support from India-USA DTAA which is similar to India-Singapore DTAA. Before we proceed with the issue it would be essential to examine Article 12(4) (5) of India-Singapore DTAA. The same is reproduced here-in-under: 4. The term fees for technical services as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received or (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein or (c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. For the purposes of (b) and (c) above, the person acquiring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Design Consultant. In any occasion this appointment is terminated and fees of the Design Consultant gets resolved fully, the Client may continue to utilize drawings/information of the Design Consultant for the purpose of continuing and completing the Project on the Site. 8. A perusal of Clause 15 clearly shows that the copyright of all documents and drawings prepared by the overseas consultant will remain with the consultant. In the case of termination of agreement, upon payment and settlement of fees the assessee is at liberty to utilize drawings/information with respect to the project on the site. Thus, the designs and plans made by the consultant are projects specific. Therefore, in our considered view there is no transfer of any technology, technical know-how or technical designs which the assessee can utilize subsequently in other projects. The Architectural design/drawings are project specific. The assessee cannot take advantage of same in other projects. 9. The assessee has separately entered into a design agreement with M/s. FBEYE International Pte. Ltd., Singapore. The said agreement also lists the covenants with respect to scope of service and work, payment of fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical presentation. 6) The phase of work will be deemed as being completed upon submission of the aforementioned drawing and information by Designer and Client's review and written approval. 10. According to the agreement the designer shall review and take appropriate steps to ensure that the construction is carried out according to the design and plan. Thus, it is unambiguously clear from the agreement that the designs and plans supplied by the oversea consultant are for the particular project, for which their services have been engaged. 11. The assessee in support of his contention placed reliance on the judgment of Hon'ble Madras High Court and various decisions of the Tribunal. The issue whether the payment made to the consultant par take the character of fees for technical services depends on facts and circumstances of each case. Where in rendering of any service there is no transfer of technology, technical know-how or any technical knowledge or skill that assessee cannot apply in furtherance of his business objects, the payments for same in our opinion does not fall within the scope of fees for technical services . Once, the payments are held n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efusal an exception more so when no negligence or inaction or want of bona fide can be imputed to the defaulting party. On the other hand, while considering the matter the courts should not lose sight of the fact that by not taking steps within the time prescribed a valuable right has accrued to the other party which should not be lightly defeated by condoning delay in a routine like manner. However, by taking a pedantic and hyper technical view of the matter the explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom the lis terminates either by default or inaction and defeating valuable right of such a party to have the decision on merit. While considering the matter, courts have to strike a balance between resultant effect of the order it is going to pass upon the parties either way. The Commissioner of Income Tax (Appeals) after taking into consideration the reasons and circumstances causing delay has condoned the delay. We do not deem appropriate to interfere with the same. Accordingly, this ground of appeal of the Revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be governed by the terms of DTAA between India and Thailand because the same was favourable and envisaged no tax liability in comparison to the normal provisions of the Act. The CIT(A) found that the impugned payments were not taxable in terms of Indo-Thailand DTAA as the said DTAA did not have any provision for taxing fee for technical services . The aforesaid conclusion of the CIT(A), in our considered opinion, is in accord with the provisions of section 90(2) of the Act. Section 90(2) provides that where Central Government has entered into an agreement with the Government of any country outside India for granting relief of tax, or as the case may be avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of the Act shall apply to the extent they are more beneficial to that assessee. Since the Indo-Thailand DTAA does not provide for taxability of fee for technical services in the case of the three recipients, who are residents of Thailand, the beneficial provisions of the DTAA shall prevail. In-fact, before us this aspect of the matter is also not in dispute. 13. However, Revenue has contended that the CIT(A) er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless the enterprise carries on business in the other contracting State through a Permanent Establishment (PE) situated therein. The taxability is only of so much income as is attributable to that PE for the sales in that other State of the goods or merchandise. In this context, having regard to the definition of PE provided in Article 5(2)(j) of the Indo-Thailand DTAA, we find that the three recipient concerns cannot be said to have any PE in India so as to bring the impugned income to tax as business profits in India as per Article 7 of the DTAA. Therefore, on this count also we find no reason to interfere with the conclusion of the CIT(A) to the effect that assessee was not required to deduct tax on the impugned payments to the three recipient concerns. 16. In the result, the order of the CIT(A) is hereby affirmed and accordingly, Revenue fails in the captioned appeals. 14. Since, the issues raised in the present set of appeals of the Revenue and the appeal decided by the Co-ordinate Bench of the Tribunal are identical, we do not find any reason to take contrary view, more so, when the ld. DR has not been able to distinguish the same. Accordingly, both the appeals o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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