TMI Blog2021 (9) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... n any independent finding on it. AO has also not discussed about the nature of services provided by the AE to the assessee. Unless the type and nature of services are analysed vis- -vis relevant DTAA provisions, it would not be possible to come to a conclusion on this issue. 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween India and Sweden. Further, as per DTAA, the impugned payment is not royalty or Fee for technical services. Accordingly, the assessee contended that it is not liable to deduct tax at source from the payment of ₹ 54 lakhs made to it s A.E. 3. The A.O. simply observed that the submissions made by the assessee is not satisfactory and accordingly disallowed the amount of ₹ 54 lakhs as per provisions of section 40(a)(i)/40(a)(ia) of the Act. 4. The Ld. CIT(A), in the initial part of his order, took the view that the payment is in the nature of Fee for technical services. The Ld. CIT(A) further noticed that the assessee has paid a sum of ₹ 1,57,99,276/- to its A.E. as communication expenses. Out of the above amount, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument is placed at page nos.100 to 112 of the paper book. The Ld. A.R. submitted that the group company is offering various services to all the entities in the group in the following fields in order to maintain uniformity in the operations of the group: 1. Service Desk (AMER/APAC/EMEA) 2. Workplace 3. Email Instant Messaging 4. Audio Web Conferencing 5. Trelleborg Network Services 6. Wide Area Network 7. Central Hosting Services 8. Licenses 9. Appendices Definitions The Ld. A.R. submitted that the assessee has neither purchased any software or got the license to use any of the software belonging to the AE. All the facilities are owned by the AE and the payment has been made fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has come to the conclusion that the assessee is liable to deduct tax at source from the impugned payment made by the assessee to it s A.E. either as FTS or as Royalty. He further submitted that the assessee has not explained before both the tax authorities about the nature of services provided by the AE to it. 9. We heard the rival contentions and perused the record. Admittedly, the agreement entered by the assessee with its A.E. and also the nature of services provided by the A.E. to the assessee have not been examined by the tax authorities. We notice that the A.O. has simply stated that the assessee is liable to deduct tax at source from the impugned payment made to the AE, i.e., he has not addressed the submissions made by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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