TMI Blog2023 (3) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... USA. In contradistinction in the case of GVK Industries Limited [ 2015 (2) TMI 730 - SUPREME COURT ] the advice of a Company called NRC [Non-Resident Company] was taken by GVK Industries for financial structure and with its advice GVK Industries had approached Indian Financial Institutions with IDBI [Industrial Development Bank of India] Bank acting as lead financier for its Rupee loan requirement and for a part of its foreign currency. In view of the admitted fact that the services were utilized in USA, we are persuaded to accept the authority in Lufthansa s Case [ 2015 (5) TMI 873 - DELHI HIGH COURT ] Therefore, in our considered opinion, the findings returned by the ITAT do not call for any interference. Decided against revenue. - HON BLE MR. JUSTICE P.S. DINESH KUMAR AND HON BLE MR. JUSTICE RAMACHANDRA D. HUDDAR For the Appellants: (By Shri. K.V. Aravind, Senior Standing Counsel) For the Respondent: (By Shri. V. Chandrashekar, Advocate) JUDGMENT, P.S. DINESH KUMAR J., This appeal by the Revenue, directed against the order dated March 20, 2020 in ITA No. 490-503/Bang/2019 passed by the Income Tax Appellate Tribunal [ITAT] has been admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act as well as DTAA [Double Taxation Avoidance Agreement] . ITAT allowed assessee's appeal holding that the payments made cannot be considered as royalty or fees and hence, no TDS was required to be deducted. Feeling aggrieved, Revenue has filed this appeal. 4. Shri. K. V. Aravind, for the Revenue, praying to allow the appeal, submitted that: the Tribunal has erred in holding that the assessee was not under obligation to deduct TDS; the Tribunal failed to observe that assessee failed to furnish the copy of agreement relevant to transactions between assessee and non-resident entity; technical services and consultancy services are two different services as held in Commissioner of Income Tax Anr Vs. ISRO Satellite Centre [(2013) 263 CTR 549]; the payments made by assessee is FTS within the meaning of Explanation 2 to Section 9(1)(vii) of the Act; payment was for use of information concerning commercial experience and squarely falls under Article 12(3) of India- USA DTAA; the Tribunal erred in holding that the conditions for invoking Sections 201(1) and 201(1A) of the Act are not satisfied. 5. Opposing the appeal, Shri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is payments made to the US Company for marketing services take the character of FTS and chargeable to tax in India. Article 12 of the DTAA reads as follows: Article 12 - Royalties and fees for included services 1. Royalties and fees for included services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for included services may also be taxed in the Contracting State in which they arise and according to the laws of that State; xxx 10. Thus, according to the Revenue the royalties and fees for included services may also be taxed in the Contracting State. 11. The AO has extracted the services rendered by the US Company in para 15 of his order and the services read as follows: WHEREAS Ad2pro India and Ad2pro USA have decided to mutually beneficial partnership under which Ad2pro USA will provide business facilitation services which would include the following: a. Assistance in arranging and facilitating rendering of advertisement design services of Ad2pro India in USA; b. Assistance in developing market for services rendered by Ad2pro I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acing reliance on M/s. Lufthansa Cargo India, Shri. Chandrasekhar urged that the authority in GVK Industries Limited is not applicable to the facts of this case. We have carefully perused the said judgment, wherein it is held as follows: 24. It is evident that Parliamentary endeavor through the later retrospective amendment, was to target income of non-residents. But importantly, the condition spelt out for this purpose was explicit: where income is deemed to accrue or arise in India under clauses (v), (vi) and (vii) of sub-section (1), such income shall be included in the total income of the non-resident whether or not, - (ii) the non-resident has rendered services in India. The revenue urges that the fiction created by the said amendment is to do away with the requirement of the non-resident having a place of business, or business connection, irrespective of whether the non-resident has rendered services in India. Did this amendment make any difference to payments made to such companies even in relation to income accruing abroad? The revenue grounds its arguments in the assumption that the later, 2010 retrospective amendment, overrides the effect of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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