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TMI Blog2017 (12) TMI 1684X X X X Extracts X X X X X X X X Extracts X X X X ..... law: 1. Ground 1; The Learned Dispute Resolution Panel ('Ld.DRP') has erred in confirming the action of the Learned Assessing Officer ('Ld AO') of taxing receipts for management services provided to its Indian affiliates amounting to Rs. 18,94,69,420 to be in the nature of Fees for Technical Services' ('FTS') within the meaning of Article 12 of the Double Taxation Avoidance Agreement between India and Sweden ("tax treaty between India and Sweden) read with the protocol thereto as well as under section 9(i)(vii) of the Income-tax Act, 1961 (the Act). The Appellant prays that the receipts for management services amounting to Rs. 18,94,69,420 are not taxable in India and hence, the addition in this regard be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee considering it to be taxable in India as Royalty / FTS. The Appellant prays that the receipts for induction and leadership training amounting to Rs. 1,69,840 are not taxable in India and hence, the addition in this regard be deleted. 3. The ground of appeal No.1 raised by the assessee is against assessability of management service charges received by the assessee from its Indian affiliates amounting to Rs. 18,94,69,420/-. 4. The learned Authorized Representative for the assessee pointed out that the assessee was Resident of Sweden and had received management service fees from the Indian companies. The issue which arises in the present ground of appeal is whether the same is Fees for Technical Services (FTS). He further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o group company in India i.e. Sandvik Asia Pvt. Ltd., Pune. In view thereof, the assessee was receiving service charges pursuant to Service Agreement entered into between the parties. Sandvik Asia Pvt. Ltd. had Zero Tax Holding order, as per more beneficial provisions of India Sweden Tax Treaty, on the basis of which the said income was not chargeable to tax in India. The assessee company consequent thereto, filed the return of income declaring Nil income for the captioned assessment year. However, the Assessing Officer was of the view that management services received by the assessee at Rs. 18.94 crores were to be assessed in the hands of assessee and following earlier years, the Assessing Officer held that the service charges received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffiliates amounting to Rs. 18.94 crores are not to be taxed in the hands of assessee. The ground of appeal No.1 raised by the assessee is thus, allowed. 8. Now, coming to the second issue which is raised vide ground of appeal No.2 which is alternative to the ground of appeal No.1. 9. The Dispute Resolution Panel (DRP) / Assessing Officer had in the alternate held that the receipts for management services of Rs. 18.94 crores be treated in the nature of dividends and taxable under Article 10 of the Tax Treaty between India and Sweden as well as under section 9(1)(iv) of the Act. 10. The learned Authorized Representative for the assessee pointed out that the said receipts were received from Sandvik Asia Pvt. Ltd. and the Tribunal had held i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the assessee in this regard, pointed out that the issue is whether the said receipts of Rs. 29,81,376/- belongs to the assessee and the DRP in this regard had given directions which have not been followed. The DRP vide para 2.2.9 at page 25 observed as under:- "2.2.9 We have carefully considered the facts and arguments furnished by the assessee. The assessee has stated that Rs. 29,81,376/- is inadvertently taxed in its hands as its receipt. However, in reality, it is receipt of its affiliate company. In this connection, we direct the learned AO to examine the assessee's contention and tax the amount in the hands of the correct recipient, if the assessee's contention is found to be correct. In the case of assessee's contention found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Schedule 2 of the Agreement and since the assessee had made available the information related to services to the service recipient, the assessee thus, satisfied the make available condition for training services and the sum of Rs. 1,69,840/- was held to be taxable. 19. The learned Authorized Representative for the assessee in this regard pointed out that even in respect of induction and leadership training receipts, India Portuguese Treaty is to be applied and it was pointed out that since the said treaty also talks of make available clause, hence not taxable in the hands of assessee. 20. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below. 21. We have heard the rival contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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