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TMI Blog2021 (12) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned Order dated 14.12.2017 passed under section 250(6) of the Income-tax Act, 1961 ("the Act") by Ld. Commissioner of Income Tax (Appeals) ["Ld. CIT(A)"] pursuant to an appeal against Assessment Order passed on 13.12.2016 under section 143(3) of the Act by Deputy Commissioner of Income Tax, Circle 11(2) ("Ld. Assessing Officer" / "Ld. AO"), is erroneous and not in accordance with provisions of law and contrary to facts, inter- alia, on the following Grounds, which are without prejudice to each other: 1. Ld. CIT(A) / AO have erred in confirming disallowance of INR 42,76,220 under section 40(a)(i) of the Act. 2. Ld. CIT(A) / AO have erred in law and on facts of the case in holding that the network and administrative support rendered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal against Assessment Order passed on 26.02.2016 under section 143(3) of the Act by Assistant Commissioner of Income Tax, Circle 11(2) ("Ld. Assessing Officer" / "Ld. AO"), is erroneous and not in accordance with provisions of law and contrary to facts, inter- alia, on the following Grounds, which are without prejudice to each other : 1. The Ld. CIT(A) / AO have erred in confirming disallowance of INR 33,60,382 under section 40(a)(i) of the Act. 2. The Ld. CIT(A) / AO have erred in law and on facts of the case in holding that the network and administrative support rendered to the Appellant by its non-resident group companies & others are technical in nature and partakes the character of Fee for ' Technical Services ("FTS") under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products. Assessee filed return of income on 30.11.2013 declaring current year losses of Rs. 10,73,85,520/-. The Transfer Pricing Officer (TPO) has not made any adjustment as per the order u/s 92CA(3) of the Act dated 31.08.2016. The Assessing Officer made addition of Rs. 47,76,220/- on account of disallowance of non deduction of TDS on net profit charges and administrative support charges as well as addition of Rs. 34,54,152/- on account of cash discount given to related parties. Thus, the Assessing Officer passed assessment order dated 13.12.2016 under Section 143(3) of the Income Tax Act, 1961. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices raised by Hitachi Limited, Japan and Hitachi Asia Limited, Singapore to the Assessee in lieu of the services Hitachi Metglas ((India) Pvt. Ltd. received by the latter make it clear that services provided by foreign AEs were not technical in nature but were standard intranet, broadband and link services. Payment of network charges does not take the character of FTS due to absence of human intervention: 20. Hence, the services received by the assessee can be said to be not in the nature of FTS as defined under Explanation 2 to Section 9(1)(vii) of the IT Act. To treat any consideration as FTS, such consideration must be paid for rendering of managerial, technical or consultancy services. 21. The revenue failed to consider the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide managerial or technical service nor there was direct interaction between the assessee and the foreign AE. Thus, where the entire process resulting in provisioning of service is fully automated process with no human intervention, charges paid for provision of such services cannot be classified as FTS for the purpose of the IT Act. ............ 27. In view of the foregoing submissions, it is held that the IT support services availed by the Assessee from Hitachi Ltd., Japan, and Hitachi Asia Ltd., Singapore are standard connectivity and networking services cannot be termed as technical services within the meaning of Section 9(1)(vii) of the Act. Hence, we hold that the assessee was not liable to deduct TDS on such expenditures. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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