TMI Blog2022 (9) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... n 195(2) while making payment to Cover More Insurance Services Pty Ltd, during the financial year 2016 17. We find that similar Nil withholding tax certificates were issued by the Competent Authority relevant for assessment years 2018 19, 2019 20, 2020 21 and 2021 22. Hon ble Supreme Court of India in GE India Technology Cen. (P.) Ltd. [ 2010 (9) TMI 7 - SUPREME COURT] 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 pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manating from the record, are: The assessee is engaged in the business of providing internet-based luggage tracking service system, worldwide travel medical assistance and various ancillary services. For the year under consideration the assessee e-filed its return of income on 26/11/2015, declaring total income at Rs. 18,81,56,000. During the course of assessment proceedings, it was observed that the assessee has paid management fees amounting to Rs. 5,40,49,783, to one of the Cover-More Group Companies, i.e., Cover-More Insurance Services Pty Limited, Australia. Accordingly, the assessee was asked to explain regarding the nature of management fees paid to the aforesaid company and as to why TDS has not be deducted in regard to the said payment. In reply, assessee submitted that the services were merely support services and were neither technical nor managerial nor consulting in nature and were not intended to transfer/make available any knowledge, experience, skill to the assessee. The assessee also submitted that it had not acquired any technical or other knowhow whatsoever from Cover-More Inter Company or any other Group Company situated abroad. The assessee also placed reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficial provision section 90(2) of the Income tax Act, 1961 as per Article 12 of India Australia DTAA. which is beneficial provision for the assessee. Accordingly, the same is not liable for tax in India as per Article 12(3)(g) as the support services intended to be provided by Cover more Australia to M/s Kartal Cover More Assist Put. Ltd. does not resut in making available any technical knowledge, experience, skill, know how or processes or consist of the development and transfer of any technical plan or design. The assessee's contention is also supported by the decision in the case of Sandvik Australia Pty Ltd vs DCIT(2013) 141 ITD 598 (Pune Tribunal). Moreover the said services are also not liable to be taxed under Article 7 business profits read with Article 5 Permanent establishment of India Australia DTAA because Cover-More Insurance Services Pty Ltd (Cover more Australia) does not have any PE in India. 3.8 The International Taxation wing of the Income Tax department after referring to the same agreement with CMA and the application made by the appellant rightly held that the payment made is for routine business support Service payment and does not fall within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upport services without any technicalities involved and without making available any knowledge or experience or skill as assumed by the AO. Accordingly, the learned CIT(A) vide impugned order directed the AO to delete the addition made under section 40(a)(i) of the Act. Being aggrieved, the Revenue is in appeal before us. 7. During the course of hearing, learned Departmental Representative ( learned DR ) by vehemently relying upon the order passed by the AO submitted that the certificate issued under section 195(2) of the Act is a provisional certificate and therefore same cannot be relied for determining the liability of the assessee to deduct tax at source in respect of payment made to the Australian group entity. The learned DR further submitted that the services provided by the foreign company to the assessee are technical in nature and therefore, the assessee was liable to deduct tax at source under section 195 of the Act. 8. On the other hand, learned Authorised Representative ( learned AR ) submitted that the assessee is existing in the business since the year 2005 and has all technical personnel for undertaking the business. Since, foreign company, which is having glo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical in nature disallowed the payment made by the assessee to the Australian entity under section 40(a)(i) of the Act for non-deduction of tax at source. 10. As is evident from the record, the assessee made an application under section 195(2) of the Act, for assessment year 2017 18, for granting certificate for Nil rate of TDS, in respect of payments to be made for management fees to the aforesaid Australian entity. In the application, which forms part of the paper book from page No.45 56, we find that the assessee provided complete details regarding the profile of the group, Australian entity, assessee, details of nature of activities carried out by the Australian company as per the agreement etc. The DCIT (International Taxation) vide order dated 02/08/2016 passed under section 195(2) of the Act, after taking note of the agreement dated 31/03/2015 entered into between the assessee and the Australian entity for providing administration/business support services, came to the conclusion that assessee is not liable for tax in India as per Article 12(3)(g) of DTAA as the support services intended to be provided by the Australian entity to the assessee does not result in making ava ..... X X X X Extracts X X X X X X X X Extracts X X X X
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