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TMI Blog2024 (5) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on 17.03.2021 itself. The assessee has to file appeal before the Tribunal against the impugned order on or before 16.05.2021 but assessee actually filed this appeal on 13.08.2021, thereby there was a delay of 89 days. When this was confronted to ld.AR for the assessee, he stated that the period is falling under the pandemic period of Covid-19 and the Hon'ble Supreme Court in Miscellaneous Application No.665 of 2021 vide order dated 23.03.2020 has given directions that the delay are to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous Application No.21 of 2022 vide order dated 10.01.2022. Since the Hon'ble Supreme Court has condoned the delay during said period, respectfully following the same, we condone the delay and admit the appeal. 3. The only issue in this appeal of assessee is as regards to the order of AO passed u/s. 143(3) r.w.s 144C(13) of the Act, framed in lieu of directions issued by the DRP dated 12.02.2021 u/s. 144C(5) of the Act holding that the sales commission received by assessee amounting to Rs. 17,21,74,839/- as accrued to the assessee in term of section 9(1) of the Act and taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lementing marketing strategy and providing support in identifying customers, understanding their requirements and liaise between the customers and the company. In consideration for the marketing services provide, the Company pays sales commission to Laser words US Inc." 4.1 The AO noted that assessee has received a sum of Rs. 17,21,74,389/- during financial year 2015-16 relevant to assessment year 2016-17 as well as commission which is held to be accrued and arise in India as per the provisions of section 9(1) of the Act and taxable in India. The assessee has claimed that he has not offered the same to tax in view of Marketing Service Agreement dated 01.04.2019 between Laser Words Private Ltd., and the assessee i.e., Laser words US Inc. The reason given by assessee was that the services undertaken by assessee under the contract shall include without limitation i.e., marketing services but the AO was not convinced with the explanation of the assessee and held that the marketing service includes training staff also to understand the beneficial aspect like e-publishing, data processing which include data capturing, XML data conversion, automation tools, technologies, single copy edit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the team of sales and account management personnel and shall include without limitation, the following services: 1. Marketing services such as assistance and guidance in connection with setting up a marketing network and sales force, including without limitation, Selection of the appropriate sales stall required to set up, maintain and operate the marketing network. * Training the marketing staff on the latest marketing techniques available and employed world-wide. 4.2 In view of the above, after verifying the list of customers and breakup of sales commission paid to customers, the AO held that these are 'fee for included services' as per Article 12(4) of Indo- USA- DTAA sub-clause (b). Finally, the AO held that the assessee has undertaken services in addition to the services stated to be marketing services. Therefore he held that these marketing services is only inseparable part of the whole services rendered to the ultimate client for which there exists contract between the assessee and the client. Therefore it is held that the said sales commission paid at 15% cannot be held to be wholly attributable to the marketing services as contended by the assessee. The service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of sales commission. The Ld. Counsel for the assessee submitted that since main services of the assessee has not satisfied the 'make available' condition as envisaged under Article 12(4) of the India -USA DTAA, connected service of sales and marketing support service also does not satisfy the make available condition and hence is not taxable. In this regard, the assessee placed reliance on the order of the decision of the Co-ordinate Bench in the case of Sheraton International, LLC [142 taxmann.com 520]. Thus, submitted that the grounds No.4.5 and 4.6 deserves to be allowed. 10. Per contra, the Ld. DR relied upon the order of the lower authorities. 11. We have heard the parties and perused the material available on records. The assessee renders services relating to e-publishing work in the nature of editorial services including page composition, language polishing, indexing, correcting faulty grammar and punctuation etc. We have held that the said sub-contracting charges do not come within the purview of "Fees for Included Services" ("FIS") under the India-USA DTAA the connected service of sales and marketing support service also does not satisfy the make available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ultimate customer and SPi India. It provides business solutions such as client workflow requirements. These functions are performed through dedicated marketing and sales team maintained by SPi US and Corporate support team of APi Philippines undertake the activity of requirement analysis, Contract negotiation and finalization of contracts. The market support service include the following functions: * Development of sales channel * Selection of the appropriate sales staff for setup, maintain marketing channels and training of marketing personnel. * Account Management and customer relationship. 4.1.4 Planning, Requirement Gathering and Analysis The requirements of the customer are first understood so as to enable providing the right solution to address the need of the customer. SPi US employees interact with the customers and understands its exact requirement and deliverable expected hy the client. The information collated by Spi US is shared with SPi India, based on which SPi India plans the execution of the project." Further going through the Marketing Service agreement between Ms Laser Words Private Limited and Ms Laser Word USA Inc submitted by the assessee and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding to the workforce who undertakes services to the clients in USA. These services according to him cannot be considered as mere marketing services for which commission is paid rather these are in the nature of 'fee for included services' and rightly taxed by the AO on the directions of DRP at the rate of 15%. In view of the above, he supported the order of DRP and that of the AO. 8. We have heard rival contentions and gone through facts and circumstances of the case. First of all, we noted from the above services reproduced above that the services are in the nature of marketing services. These marking services are rendered by the assessee through agreement dated 01.04.2010 with SPI Technologies India Pvt. Ltd. As per agreement, these services are noted by us in above para 6.1 and also the relevant marketing and sales service in term of agreement between Laser Words Pvt. Ltd., and the assessee i.e., Laser words US Inc. In our view, these services rendered by assessee in no way can be called as 'fee for included services' whereas these payments are for marked services. We noted from the facts of the case that the assessee has entered into a contract with SPI Technologies India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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