TMI Blog2020 (9) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... , then, adequate reasons ought to have been assigned by the Tribunal in that regard. We find that nothing was recorded by the Tribunal in the impugned order. Argument of Revenue of the impugned order will clearly show that the impugned order is an order of remand with a direction to the Assessing Officer to redo the matter and that no substantial question of law would arise in this appeal for the Court to interfere with the impugned order - We do not agree with the said submission since the legal position is that an order or a judgment has to be read in its entirety and cannot be read in a truncated fashion. Thus, what flows from the observations and directions in paragraph 11 of the impugned order has to be read along with paragraph 13. In fact, in paragraph 11, there are pointed observations to the Assessing Officer, which appear to be wholly adverse to the assessee. Which we need to point out is that the Tribunal observed in paragraph 11 that the AO has to examine as to whether there was any concerted effort to shift profits by camouflaging it as commission on sales. This was never the case of the Revenue either before the AO or before the CIT(A) or for that matter befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the DTAA between India and US particularly when the recipient did not have any permanent establishment in India ? 4. The assessee is a private limited company and a subsidiary of a company incorporated in the United States (US). The assessee is engaged in business process outsourcing and IT enabled services to a wide range of industries and primarily caters to third party clients across varied industries such as insurance, health care, banking, etc., apart from providing support services for BPO operations and transaction processing services to its associated enterprises located across the globe. The assessee did not undertake any marketing activity and the US company was responsible for business development of the group including the assessee. 5. The assessee is stated to have entered into an agreement dated 01.7.2005 with the company incorporated in the US for the purpose of rendering marketing services. The US company was remunerated with a business development commission (BDC) to procure business for the assessee. During the assessment year under consideration namely 2008-09, the assessee incurred an amount of ₹ 22,41,69,067/- in relation to payment of BDC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manent establishment in India and that the BDC was not taxable in the hands of the recipient in India in view of the Double Taxation Avoidance Agreement (DTAA) between India and the US. 9. With regard to the jurisdiction of the Tribunal, the learned counsel for the appellant assessee has referred to the decisions in the cases of (i) New India Life Assurance Co. Ltd. Vs. CIT [reported in (1957) 31 ITR 844 (Bombay)] (ii) Omar Salay Mohamed Sait Vs. CIT [reported in (1959) 37 ITR 151 (SC)] (iii) V.Ramasamy Iyengar Vs. CIT [reported in (1960) 40 ITR 377 (Madras)], (iv) S.Chenniappa Mudaliar Vs. CIT [reported in (1964) 53 ITR 323 (Madras)], (v) L.J.Shaik Mohammed Bros. Vs. CIT [reported in (1978) 112 ITR 622 (Madras)] (vi) R.R.Industries Ltd. Vs. ITO (OSD) [reported in (2013) 356 ITR 97 (Madras)] (vii) Cholamandalam MS General Insurance Co. Vs. Asst./Dy. CIT [reported in (2013) 357 ITR 597 (Madras)] (viii) Sanmar Speciality Chemicals Ltd. Vs. ITO [reported in (2018) 93 Taxmann.com 330 (Madras)] and (ix) K.Rajiv Vs. Addl.CIT [reported in (2018) 98 Taxmann.com 418 (Madras)] 10. All the above decisions are referred to in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keting department and the nature of services includes getting new customers, retaining and growing existing customers. And the process includes generating prospective leads, allocating the concerned marketing people to follow up with the leads and present to the prospective client above the nature of services and the benefit that the client will get by outsourcing to locations like India. The above process of carrying out sale and marketing and promotional activities cannot be called as technical services under Section 9(1)(vi) of the Act. Since sales and marketing functions are routine function for development of business, the contention of the appellant that these payments cannot be called as fee for technical services under Section 9(1)(vi) of the Act, needs to be accepted unless the contrary is proved by established facts. The Assessing Officer has also not properly appreciated the clarification on the expenses incurred on lead generation. The appellant has clarified in the subsequent response that these payments are for end to end mortgage business and for this particular business, parent company has not charged business development commission. The AO has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .No.2944/Mum/2012 has held that payment for sales and marketing is not fee for included services under India US DTAA where it involved rendering of similar service of sales and marketing to the Indian subsidiary, which is also engaged in the BPO business like that of the appellant. Considering the above submission of the appellant, I hold that these payments, which are for sales and marketing promotion for the development of the business of the appellant is neither fee for technical services nor consultancy services under Section 9(1)(vi) of the Act or fee for included services under Article 12(4) of the India US DTAA. Further, these services have been rendered outside India. Under these circumstances and facts of the case, the appellant does not fall squarely right within the ambit of the provisions of the IT Act, 1961, to brand the payments of business development commission given to the overseas principal company as 'FTS are 'consultancy services'. Therefore, the question of deduction of tax at source does not arise under Section 195. I find in this regard that the AO has not succeeded to lawfully declare the business development commission under discussion as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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