TMI Blog2020 (10) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered by M/s Adadyn Inc., USA, in the context of sec. 9(1)(vii) or DTAA, even though he has extracted the agreement entered between the assessee and M/s Adadyn Inc. Assessee contention that nature of services provided by the above said company is in the nature of business support services and not in the nature of consultancy services in strict sense. It is not shown that the above said contention of the assessee is wrong. Nature of services provided by M/s Adadyn Inc., USA has not been analysed by Ld CIT(A) also. On the contrary, it is the contention of the assessee that the first appellate authority has entertained erroneous belief that the assessee has been using market analysis/ online data/data bases etc., belonging to M/s Adadyn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1A) of the Income-tax Act,1961 ['the Act' for short]. 2. The assessee company is earlier known as Ozone media solutions Private Limited . It is engaged in the business relating to online advertising like internet based content, communications, online ad space, online ad network and renders advertising technology solutions. The department noticed that the assessee has been making payments to its US subsidiary named M/s Adadyn Inc, which were in the nature of selling and marketing expenses. The AO took the view that the impugned payments are in the nature of Fee for technical services and hence the assessee should have deducted tax at source from the above said payments u/s 195 of the Act. Since the assessee had not deducted T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness support services to the assessee in India by utilising its skill and marketing capability in the local overseas market. Since the assessee has utilised the services for its business carried on in India, he held that the impugned payments are attracted by the provisions of sec.9(1)(vii)of the Act. He also held that the assessee is liable to deduct TDS both under the Act and DTAA as the payments are in the nature of Fee for Technical Services. The AO noticed that the assessee has not furnished Tax residency certificate and hence he held that the provisions of sec.206AA shall apply. Accordingly he adopted higher rate of 20% for determining tax liability u/s 201(1) of the Act. 5. Accordingly, the AO raised demand u/s 201(1) and interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also). Since it is taxable under the IT Act as well as DTAA the TDS must have been deducted. 63. On the issue of rate applicable I hold that the rate prescribed under DTAA or Act whichever beneficial to the appellant is applicable. 8. Aggrieved by the order passed by Ld CIT(A), the assessee has filed these appeals. 9. The Ld A.R submitted that the assessee is engaged in the business of online advertisements. Since its customers are located in USA, Canada and other countries, it has floated a subsidiary in USA by name M/s Adadyn Inc. The assessee has utilised the above said company in order to provide business support services in the form of identifying target customers. The role of M/s Adadyn Inc., is limited to identifying ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submitted that the tax authorities have not demonstrated as to how the services rendered by M/s Adadyn Inc fall in the category of technical services and how it was made available to the assessee. The Ld CIT(A) has also expressed the view that a part of payment has been made for other services also. He contended that the payments made by the assessee do not fall under the category of royalty or fee for technical services either under sec. 9(1) of the Act or under DTAA. Accordingly he submitted that the order passed by Ld CIT(A) is liable to quashed. 11. On the contrary, the Ld D.R submitted that the Ld CIT(A) has upheld the view of the AO that part of the payments constitute Fee for technical services. However, the Ld CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervation of Ld CIT(A) was strongly objected to by the assessee. Hence the observation of the Ld CIT(A) that a part of payment constitutes Royalty is strongly disputed. Further, we also notice that the Ld CIT(A) has also not properly analysed the provisions of article 12 of India USA DTAA. Without analysing the nature of services, the Ld CIT(A) has observed that the services were made available. Thus, we notice that the Ld CIT(A) has rendered the decision without bringing on record supporting materials and also without properly analysing the provisions and contentions of the assessee. In the absence of proper analysis of facts relating the issues contested before us, it would be difficult for the Tribunal to adjudicate them. 14. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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