TMI Blog2022 (10) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... services to be rendered are in the nature of composite services and from the said agreement, it is difficult to ascertain whether they are in the nature of fee for technical services or only reimbursement of cost. Although, the assessee strongly relied upon the certificate issued by the Deloitte GmbH and contended that the payment made to the non-resident is only cost incurred by the parent company without any mark-up, which was not supported by any evidence. Therefore, we are of the considered opinion that the issue needs to be re-examined in light of various averments including cost sharing agreement, certificate issued by the Deloitte GmbH and the provisions of section 9(1)(vii) of the Act read with DTAA between India and Germany. The issue needs to go back to the Assessing Officer for further verification and accordingly, we direct the Assessing Officer to re-examine the issue of applicability of TDS as per section 195 of the Act on payment made to non-resident and decide the issue in accordance with law. Appeals filed by the assessee are allowed for statistical purposes. - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on services and that it was agreed that the cots in connection with the same will be shared jointly by the pool members as beneficiaries. 6) The CIT (A) failed to appreciate that in respect of payments made to BASF SE, the same cannot be treated as Fees for technical services, in view of the Double Taxation Avoidance Agreement between India and Germany. The CIT (A) ought to have appreciated that no technology was made available to the appellant and accordingly the payment is not in the nature of fees for technical services. 7) The CIT(A) ought to have appreciated that the sum paid to BASF SE in not taxable in view of principle of mutuality. 8) Your appellant prefers this appeal on these grounds and such other grounds that may be adduced before or at the time of hearing of this appeal. 3. Brief facts of the case are that the assessee, M/s. BASF Catalysts India Private Limited, is a part of group concern companies of BASF group comprising of BASF SE, Germany and its number of subsidiaries and affiliates. The assessee is also one of the pool members of the BASF Group. The assessee entered into a Cost Sharing Agreement (CSA) with BASF SE, Germany as one of the pool m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent company is on cost to cost basis as per Cost Sharing Agreement without any markup. Therefore, in the absence of any income element in India for non-resident, the question of deduction of TDS does not arise. The Assessing Officer as well as the ld. CIT(A) erred in holding that payment made to non-resident is taxable in India in terms of provisions of section 9(1)(vii) of the Act and DTAA between India and Germany and the assessee is liable to pay TDS. Further, the ld. Counsel for the assessee relied upon plethora of judicial precedence and relevant case law cited in the form of paper book by the assessee are as under: 1. CIT vs. Dunlop Rubber Co. Ltd. (1983) 143 ITR 493 (Calcutta) 2. DECTA vs. CIT (1999) 237 ITR 190 (AAR-N.Delhi) 3. DIT vs. Krupp UdheGMBH [2013] 354 ITR 173 (Bom) 4. AT S India Pvt. Ltd. ITA 1160 and 2305 of 2013-ITAT Kol 5. DCIT vs. KPMG [2017] 81 taxmann.com 118 (Mumbai) 6. DCIT vs. Ernst Young P Ltd. 32 ITR(T) 639 (Kolkata) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot liable to be taxed in India and consequently, the assessee need not to deduct TDS in India. We find that although the assessee claims to have reimbursed cost incurred by parent company to provide certain common services without any markup, the said claim of the assessee was not substantiated. Further, if we go through the cost sharing agreement between the assessee and its parent company, the services to be rendered are in the nature of composite services and from the said agreement, it is difficult to ascertain whether they are in the nature of fee for technical services or only reimbursement of cost. Although, the assessee strongly relied upon the certificate issued by the Deloitte GmbH and contended that the payment made to the non-resident is only cost incurred by the parent company without any mark-up, which was not supported by any evidence. Therefore, we are of the considered opinion that the issue needs to be re-examined in light of various averments including cost sharing agreement, certificate issued by the Deloitte GmbH and the provisions of section 9(1)(vii) of the Act read with DTAA between India and Germany. Further, similar issue was considered by the Mumbai Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, a copy of which is placed at Page-46 of the paper book, clearly reveals that it refers to the cost sharing agreement dated 25th May 2000. As regards the observations of the learned Commissioner (Appeals) that nature of services rendered is managerial and technical, there is absolutely no reasoning on what basis the learned Commissioner (Appeals) has come to such conclusion. Though, he has stated that such conclusion is arrived at after going through the cost sharing agreement, however, the order passed by the learned Commissioner (Appeals) does not reveal whether he has examined and analyzed the nature of services rendered by the pool members to term the payment made as fees for technical services. Further, only because the assessee became party to the agreement in December 2010, it cannot be said that the payment made by the assessee for services are in the nature of fees for technical services. It is necessary to observe, the assessee has furnished before us a number of documentary evidences, some of which for the first time by way of additional evidences, to demonstrate that the payment made to BASF SE is actually relating to services rendered by different pool members on c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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