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2020 (3) TMI 1075 - ITAT DELHIIncome accrued in India - management fee as taxable as the Fee for Technical Services (FTS) under article 13 of Double Taxation Avoidance Agreement between India-France read with protocol to the DTAA - assessee in the instant case, being a French entity, is covered by the Indo-French DTAA and in view of MFN clause, the restricted provisions of India-UK DTAA have been invoked by the assessee - HELD THAT:- In view of the arguments of the Learned DR, it is evident that the assessee has not provided the entire correspondence regarding the services rendered by the assessee to the Indian entity and in absence of which lower authorities has decided all the three issues on the basis of agreement only i.e.firstly, whether the services are purely managerial or falling under the technical/consultancy services; secondly, services are ancillary and subsidiary to the application or enjoyment of the right, property, information and thirdly, services make available technical knowledge, experience, skill, know-how etc. No other documents have been produced by the assessee in relation to the actual services rendered. This submission of learned DR has not been disputed by the learned counsel of the assessee. In our opinion, decision arrived by the lower authorities is not based on proper appreciation of the facts required for examining of the treaty provisions applicable in the case of the assessee, and therefore we feel it appropriate to restore this issue back to the file of the AO for deciding afresh, with the direction to the assessee to furnish all the necessary documentary evidence in support of the services rendered by the assessee to the Indian entity including the correspondence in respect of the services provided so as to enable the Assessing Officer to decide the issue in dispute in accordance with law. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. The ground No. 2 of both of the appeals is accordingly allowed for statistical purposes. Corporate guarantee fee held as fee for technical services under article 13 of the India France DTAA and section 9(1)(vii) - AO held that the said corporate guarantee fee received by the assessee from the ‘JCD India’ was actually in lieu of services rendered though it has been paid in the guise of corporate guarantee fee and therefore its actual nature is FTS - HELD THAT:- AO held that corporate guarantee fee was in lieu of the services rendered for assisting the AE in providing loan from foreign banks, but no detail of kinds of services and evidence in this regard have been brought on record by the Assessing Officer and therefore this contention of the Assessing Officer that the guarantee fee was received in lieu of the services rendered, is rejected. In our opinion, services of corporate guarantee by the assessee not being in the nature of services of managerial, technical or consultancy, the corporate guarantee fee received by the assessee cannot be termed as fee for technical services either under the section 9(1)(vii) or under article of the DTAA. Characterizing reimbursement of Social Security Contribution to the assessee as fee for technical services under article 13 of India France DTAA - HELD THAT:- We note that the learned DRP in the assessment year 2012-13 has applied the ratio of the decision of the Hon’ble Delhi High Court in the case of Centrica India offshore private limited [2014 (5) TMI 154 - DELHI HIGH COURT] . This issue of application of the decision of the Hon’ble Delhi High Court came up before the learned DRP in assessment year 2012-13 for the first time. But we find that agreements with regard to secondment of the employees between the assessee and the JCD India, agreement between the expatriate employee and the assessee and employment agreement between the JCD India and expatriate, have not been examined either by the Assessing Officer or by the learned DRP and therefore in the interest of the justice, we feel it appropriate to restore this issue to the file of the Assessing Officer for verifying various agreements mentioned above and then decide the issuein-dispute in accordance with law after providing an adequate and sufficient opportunity of being heard to the assessee. The ground No. 4 of both the appeals, is accordingly allowed for statistical purposes. Education cess and secondary and higher education cess is not applicable while taxing the income on gross basis under the India France DTAA - HELD THAT:- In view of the provisions of the India France treaty on the issue being similarly worded with the provisions of the India UK DTAA, following the finding of the Tribunal in the case of BOC group Ltd. [2016 (1) TMI 414 - ITAT KOLKATA] we direct the Assessing Officer to delete the education cess and secondary and higher education cess levied on the Income-tax on the gross basis under the India France DTAA. The ground No. 5 in both assessment year is thus allowed. Credit of tax deducted at source by the JCD India while calculating the tax liability of the assessee - HELD THAT:- This is issue of verification of the credit of tax deducted at source by the Assessing Officer. Accordingly, we restore this issue to the file of the Assessing Officer with the direction to the assessee to produce all the necessary documentary evidence in support of its claim of credit of tax deducted at source for verification by the Assessing Officer along with the tax credit available in the database of the Income-tax department and then allow the credit in accordance with law. The ground No. six of the appeal in both the years is allowed for statistical purposes.
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