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TMI Blog2022 (9) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,783 paid to the Australian Payee do not constitute fees for Technical Services rendered by the Payee to the assessee company? 3. Whether on the facts and circumstances of the case and in law the Ld CIT(A) has erred in holding that the service rendered by the payee has not resulted into making available technology/knowledge/skill/knowhow to the assessee within the meaning of Articles 12(3) of the DTAA between India and Australia? 4. Whether on the facts and circumstances of the case and in law the Ld CIT(A) has erred in holding that the Assessing Officer was obliged to follow the certificate issued u/s 195(2) of the T Act 1961 by the DCIT(International Taxation), Mumbai without appreciating the facts that the certificate issued by the DCIT(International Taxation), Mumbai was for a different assessment year and in respect of a different party/client of the assessee? 5. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of Assessing Officer be restored." 3. The only grievance of the Revenue in the present appeal is against deletion of disallowance of Rs. 5,40,49,783 made under section 40(a)(i) read with section 195 of the Act. 4. The bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Agreement ('DTAA'). Accordingly, the AO came to the conclusion that the assessee should have deducted tax in respect of amounts payable to the overseas entity under the provisions of section 195 on the ground, that, the amount payable to them was chargeable to tax in India under Article 12 of DTAA dealing with 'Royalty' and section 9(1)(vii) of the Act. As a result, the AO disallowed the payment of Rs. 5,40,49,783, under provisions of section 40(a)(i) read with section 195 of the Act. 5. In appeal, learned CIT(A), vide impugned order dated 27/03/2019, after taking note of certificate for non-deduction of TDS issued under section 195(2) by the DCIT (International Taxation), observed as under: "3.7 It is also seen that for FY. 2016-17 the appellant company made application u/s 195(2) of the Act to the Dy. Commissioner of Income-tax (International Taxation), Range-3(1)(2) for Nil deduction of Tax in respect of payments made to CMA towards the same support services. The appellant received order u/s 195(2) dated 02.08.2016, wherein after discussions and referring to the very same agreement entered into with CMA, the DCIT (International Taxation), Range 3(1)(2) held as under. "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the i position to be changed in a subsequent year." This judgment of the Apex Court has been consistently followed by various judicial and appellate forums and considering the fact that the assessee is making the same payment year after year as per the agreement, the considered stand of the AO having jurisdiction of section 195 taken in latest assessment years cannot be changed to a different stand in an earlier assessment years." 6. Further, the learned CIT(A) after referring to various circulars issued by CBDT held that the AO was under obligation to follow the certificate issued under section 195(2) of the Act, determining the withholding taxes at Nil in the case of aforesaid Australian group entity and the assessee. The learned CIT(A) also noted that such certificate was neither modified nor cancelled by the DCIT (International Taxation) and has been granted for subsequent years also on the same basis, which proves tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement, copy of which forms part of the paper book from page No. 18 - 22, we find that the Australian entity agreed to provide administration/business support services including actuarial, finance support, growth and innovation support, human resource support, infrastructure support, design of marketing and sales brochure and development of group marketing strategy, to the assessee. As per the agreement, the services are merely support services and are neither technical nor managerial nor consulting in nature and are not intended to transfer/make available any knowledge/experience/skill to the assessee. Further, we find that the purpose of activities undertaken under the aforesaid agreement is to give direction to the assessee so that they adopt or follow standard procedure or template in various matters. It is further mentioned that the services are non-technical in nature and are availed by the group companies with the intention of carrying on business in line with the best practices followed by Cover-More group. In consideration of services received under the aforesaid agreement, the assessee paid amount of Rs. 5,40,49,783 to the Australian entity during the year. The AO by tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also no allegation that there is any change in facts in the year under consideration vis-à-vis the assessment years during which the aforesaid Nil withholding tax certificates were issued under section 195(2) of the Act. The Hon'ble Supreme Court of India in GE India Technology Cen. (P.) Ltd. vs CIT: [2010] 327 ITR 456 (SC) held that section 195(2) provides a remedy by which a person may seek a determination of the "appropriate proportion of such sum so chargeable", where a proportion of the sum so chargeable is liable to tax. Once, the assessee has sought the remedy provided under the Act and the Competent Authority of the Income Tax Department after consideration of the facts, which are similar to the facts for the year under consideration, came to the conclusion under section 195(2) of the Act that Nil tax is liable to be withheld, in such a situation submission of the Revenue that assessee has failed to deduct tax at source on the payment made to the Australian entity is completely contrary to its own determination of such liability in the case of assessee. In view of the above, we find no infirmity in the impugned order passed by the learned CIT(A). Accordingly, all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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