TMI Blog2018 (12) TMI 1965X X X X Extracts X X X X X X X X Extracts X X X X ..... F group, a party to the same cost sharing agreement has been issued a no deduction certificate under section 195(2) why a differential treatment should be meted out to the assessee also needs to be considered with proper reasoning. Since, the aforesaid aspects have not been considered by the Departmental Authorities and many of the documentary evidences were furnished for the first time before us by way of additional evidences and were not before the Departmental Authorities, though we are of the opinion that the additional evidences furnished by the assessee require to be admitted as they will have a crucial bearing for deciding the issue, however, to afford a fair opportunity to the Department to examine such documents, we are inclined to restore the issues raised in the aforesaid grounds to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. While doing so, the Assessing Officer must consider the ratio laid down in the decisions to be cited before him - Assessee s appeals are allowed for statistical purposes. - ITA no. 4754/Mum./2015, ITA no. 4755/Mum./2015 - - - Dated:- 14-12-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority, the assessee filed a written submission stating the reasons for which the payment made to BASF SE cannot be considered as fees for technical services thereby does not require deduction of tax at source under section 195(1) of the Act. The learned Commissioner (Appeals) after considering the submissions of the assessee in the context of the facts and material on record, however, upheld the orders passed by the Assessing Officer. 5. Shri P.J. Pardiwala, learned Sr. Counsel, appearing for the assessee submitted, the first appellate authority has completely misconceived the facts thereby came to an erroneous conclusion while upholding the orders of the Assessing Officer. He submitted, the holding company i.e., BASF SE (formerly known as BASF AG) entered into a cost sharing agreement with other companies of BASF Group, which are mainly production companies, on 25th May 2000, he submitted, as a result of globalization of business activities the world wide structure of production and the division of function within the BASF group, the pool members use and purchase number of management and other services which are provided in common interest and for the common benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r does not render any service, there is no requirement for deduction of tax on remittance made to BASF SE. In support of such contention, he relied upon the decision of Authority for Advance Ruling in ABB Ltd., [2010] 322 ITR 564. To emphasize on the fact that the services were actually rendered by the pool members on cost to cost basis, the learned Sr. Counsel drew our attention to a statement showing cost to cost allocation of pool partners to BASF India Ltd. via BASF SE. Further, he also drew our attention to certain details / documentary evidences placed at Pages 81 to 96 of the paper book. The learned Sr. Counsel also drew our attention to letter dated 28th December 2011, placed at Page 97 of the paper book to contend that the payment made was for reimbursement of cost and not fees for technical services. To further clarify the factual position, the learned Sr. Counsel drew our attention to the letter dated 3rd December 2018, issued on behalf of Deloitte clarifying that the reimbursement of cost was on actual basis and without any mark up. However, he fairly submitted that many of these documents are being furnished for the first time before the Tribunal and in this regard he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as fees for technical services as per the provisions of section 9(1)(vii) of the Act. He also submitted, the payment made is in the nature of fees for technical services as per the definition provided in the India Germany Double Taxation Avoidance Agreement, since, it is wide in scope and there is no condition of make available . Referring to the report of the independent auditor, Deloitte, the learned Departmental Representative submitted, much reliance cannot be placed on the said document as the purpose and legal basis for which the document is prepared is not clear. Further, he submitted, in the said report there is no analysis on the amounts and figures. He submitted, while the cost sharing agreement is executed between BASF AG and the pool members, the assessee has made payment to BASF SE. Therefore, it cannot be said that the payment has been made as per cost sharing agreement. The learned Departmental Representative submitted, the report of the German auditor Deloitte is also qualified as the auditor stated that it is very limited in scope. The learned Departmental Representative submitted, the report of the German auditor cannot be taken at its face value. He submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and perused materials on record. We have also applied our mind to the decisions relied upon. The dispute in the present appeal arise out of rejection of assessee s application made under section 195(2) of the Act requesting for no deduction of tax at source on remittances to be made. The Assessing Officer has rejected the aforesaid applications filed by the assessee on the ground that services rendered by BASF SE to whom remittances were to be made are in the nature of fees for technical services. However, the aforesaid order passed by the Assessing Officer is cryptic and bereft of reasoning. The Assessing Officer has not stated on what basis he considers the nature of payment to be made is fees for technical services. It is also not known whether before treating the nature of payment as fees for technical services the Assessing Officer has properly examined the cost sharing agreement, the nature of services provided and other relevant factors including the relevant provisions under the India Germany DTAA. While deciding the appeals of the assessee, the learned Commissioner (Appeals) has upheld the orders passed by the Assessing Officer for the following reasons: i) Invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are in the nature of fees for technical services and chargeable to tax at the hands of the recipient in India, all necessary and relevant documents including the cost sharing agreement, the auditor s report as well as other additional evidences filed by the assessee before us needs to be properly analysed and examined. Further, contention of learned Sr. Counsel that BASF SE having not rendered any services to the assessee, payment made cannot be treated as fees for technical services as per Explanation 2 to section 9(1)(vii) has not been considered by the Departmental Authorities both factually and legally. Further, the contention of the assessee that when another Indian company of BASF group, a party to the same cost sharing agreement has been issued a no deduction certificate under section 195(2) of the Act, why a differential treatment should be meted out to the assessee also needs to be considered with proper reasoning. Since, the aforesaid aspects have not been considered by the Departmental Authorities and many of the documentary evidences were furnished for the first time before us by way of additional evidences and were not before the Departmental Authorities, though we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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