9911796707
TMI Blog2024 (1) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that he would prefer to argue the appeal on merits and the legal issues raised in ground no.1 and 2 may be kept open. 3. Learned Departmental Representative had no objection. 4. Considering the above, we proceed to deal with the merits of the issue arising in the appeal raised in ground No.3. 5. The short issue arising for consideration is whether the management fee/processing fee received by the assessee is in the nature of Fees for Technical Services (FTS) under provisions of section 9(1)(vii) of the Act as well under Article 12 of the India Germany Double Tax Avoidance Agreement (DTAA). 6. Briefly the facts are that the assessee is a non-resident banking company incorporated in Federal Republic of Germany and tax resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from M/s Filatex India Ltd. is in the nature of FTS, hence, taxable in terms of Article 12 of the treaty as well as section 9(1)(vii) of the Act. Accordingly, he treated the amount in dispute, as income of the assessee while framing the draft assessment order. 8. Being aggrieved with the draft assessment order, the assessee raised objections before learned Dispute Resolution Panel (in short DRP). However, without deciding the objections on merits, learned DRP directed the Assessing Officer to consider assessee's claim in the light of the case laws and pass a speaking order. Ultimately, the Assessing Officer passed the final assessment order repeating the observation made in the draft assessment order. 9. Before us, ld. Counsel appearing f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion date. Margin has been defined in the agreement to mean 1.55% per annum. It is the case of the assessee before us, since, the applicable EURIBOR rate on the interest determination date was zero, the margin up to 1.55% has been received by the assessee. 11. It is further observed, in terms of Article 8 of the loan agreement, the borrower shall pay commitment Fee @0.55%, non-refundable management fee @ 1.25% and non-refundable documentation fee, EUR 20,000/- flat. Undisputedly, the Assessing Officer is in agreement with the assessee that interest along with commitment fee and documentation fee are exempt under Article 11(3)(b) of the India Germany Tax Treaty. Whereas, he has held that management fee is not covered under the said provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment attached to the loan. In the fact of the present appeal, the Assessing Officer, no doubt, has accepted the claim of the assessee that interest along with other fees, such as, commitment fee, documentation fee attached to the loan granted are exempt under Article 11(3)(b) of the Act. After carefully examining the facts on record, we are of the considered opinion that even the management fee is of similar nature as commitment fee and documentation fee, as it is closely linked to the loan granted, hence cannot be distinguished from the documentation fee and commitment fee. Thus, in our view, management fee partakes the character of interest under section 2(28A) of the Act. Hence, would be exempt from taxation in India in terms of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X
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