9911796707
TMI Blog2021 (9) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act,1961 ['the Act' for short] and it relates to assessment year 2013-14. 2. The assessee is engaged in the business of manufacture and sale of seals and bearings. The assessee has entered into an international transaction of payment of communication charges to its Associated Enterprise (A.E.) The TPO held that the payment to be at arm's length and accordingly, did not make any transfer pricing adjustment. The A.O., however, noticed that the assessee has not deducted tax at source on the amount of Rs. 54 lakhs paid to it's A.E. Accordingly, the A.O. issued show cause notice to the assessee to explain why disallowance u/s 40(a)(i) of the Act should not be made. In the reply, the assessee submitted that it is covered by DTAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for TDS or payment for purchase of software. He also observed that the A.O. should verify the details of TDS deducted from the payment of management fee of Rs. 52,67,660/-. It can be noticed that the Ld CIT(A) has held that the impugned payment is Fee for technical services or Royalty. Aggrieved by the order passed by Ld. CIT(A), the assessee is in appeal before us. 6. The Ld. A.R. submitted that the parent company (AE) is providing "common infrastructure facilities" and the impugned payment has been made by the assessee for use of those infrastructure facilities. He submitted that the details of services provided by the AE are given in a document titled as "Group I.T. Services Catalogue". The above said document is placed at page nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, he submitted that the decision rendered by Hon'ble Karnataka High Court in the case of Samsung Electronics Ltd. (supra) has since been reversed by the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. 8. On the contrary, the Ld. D.R. submitted that the Ld. CIT(A) has incorporated the submissions made by the assessee before the A.O. and based upon the same has come to the conclusion that the services provided by the A.E. to the assessee are in the nature of fee for technical services. Further, by placing reliance on the decision rendered by Hon'ble Karnataka High Court in the case of Samsung Electronics Ltd. (supra), the Ld. CIT(A) has come to the conclusion that the assessee is liable to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not examined the type and nature of services. 11. The above said discussions would show that the tax authorities have not examined the factual aspects properly taking into consideration the definition of the terms namely "Royalty" and "Fee for technical services" as given in DTAA. Since the impugned payment is covered by DTAA, the A.O. is required to be examined the taxability of these payments and liability to deduct tax at source in accordance with the provisions of DTAA unless it is shown by the assessee that the provisions of Indian Income Tax Act is more beneficial to it. It has been held so by Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd (supra). Under these set of facts, we are of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
