TMI Blog2017 (2) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... done by the engineers of M/s. Walmsleys Ltd., UK in India. In fact, the engineers came down to India to the site of the assessee to supervise the erection personally. This clearly demonstrates that the engineering service was rendered in India by M/s. Walmsleys Ltd. UK. Even though the design and drawings were said to be prepared in the UK, mere preparing design and drawings would not complete the service rendered by M/s. Walmsleys Ltd. UK. The Walmsleys Ltd. UK has to necessarily execute the project and supervise the same in India. Therefore, the UK company not only made available of design and drawings to the assessee-company but also erected the entire project in India under the personal supervision. Therefore, the services rendered by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in filing the appeal by the assessee in I. T. A. No. 45/Mds/2013. The assessee has filed a petition for condonation of delay. We have heard the learned representative and the learned Departmental representative. We find that there was sufficient cause for not filing the appeal before the stipulated time. Therefore, we condone the delay and admit the appeal. 3. The first ground of appeal is with regard to deduction of travelling expenditure to the extent of ₹ 4,14,826. This ground was raised only for the assessment year 2008-09. 4. Sh. R. Vijayaraghavan, the learned counsel for the assessee, submitted that the assessee has paid a sum of ₹ 26,13,446 to Michael Meycke Vetriebsburo, Germany towards commission. Out of this, a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e works for commission. When the assessee paid commission to an agent, the travelling expenditure of that agent cannot be claimed as deduction. This Tribunal is of the considered opinion that when the assessee has made comprehensive payment of commission, which included travelling expenditure, deduction towards travelling expenditure of foreign agent cannot be claimed. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 7. The next issue arises for consideration in both the appeals is with regard to disallowance of ₹ 2,89,70,704 under section 40(a)(ia) of the Act. 8. Sh. R. Vijayaraghavan, the learned counsel for the assessee, submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the relevant material available on record. The assessee engaged the services of M/s. Walmsleys Ltd., UK, for design, manufacturing and start-up of paper machines. From the material available on record it appears even for the civil foundation for the machinery, the basic engineering outputs were given by M/s. Walmsleys Ltd., UK. The Commissioner of Income-tax (Appeals), after examining the agreement between the parties, has observed as follows : . . . During the period of this agreement, M/s. Walmsleys agrees to refrain from supplying know-how or technical services to the competitors of Servall within India. The co-operation agreement will be initially valid for a period of three years and after the initial three years the vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r technical services under article 13(4) of the Double Taxation Avoidance Agreement with the UK. The appellant-company did acquire technical knowledge from the drawings and designs supplied by the UK company. The fees paid by the appellant-company clearly comes within the definition of fees for technical services. The engineers from the UK were supervising the installation of the machinery made by the appellant-company and also major section assembly checkouts were made in Servall's manufacturing facility with a Walmsleys specialist in attendance. These acts clearly proves that the fees paid was only for technical services which are liable to tax in India in the hands of the UK company. 11. From the above observation of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to disallowance of ₹ 28,10,527. 13. Sh. R. Vijayaraghavan, the learned counsel for the assessee, submitted that these amounts were received from three concerns, namely, M/s. BILT Industrial Packaging, M/s. Newquest Corporation and M/s. Nava Bharat in the earlier assessment years. Since these amounts were received in the earlier assessment years, according to the learned counsel, the same is not taxable. 14. On the contrary, Shri A.V. Sreekanth, the learned Departmental representative, submitted that though the assessee claims that the payment was received in the earlier assessment years, the assessee could not file any details regarding the supplies made to these parties. The assessee could not file any details with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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