9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (4) TMI 1163 - AT - Income TaxIncome deemed to accrue or arise in India - Royalty or Fees for Technical Services - assessee received consideration for project support services such as Midrange support services, Database support services, Service delivery management, and support services in relation to the Standard Chartered Bank Project from Atos India - AO held the consideration received by the assessee from the Indian entity is nothing but Royalty within the definition as per Article 12(3) of the India Singapore DTAA - HELD THAT - We find the coordinate bench of the Tribunal in assessee s own case 2021 (4) TMI 446 - ITAT MUMBAI held that payment received by the assessee from various projects related services, including Standard Chartered Bank Project, would not qualify as Royalty/Fees for Technical Services. The issue arising in the present appeal is recurring in nature and has been decided by the coordinate bench of the Tribunal in the preceding assessment years. Thus we uphold the plea of the assessee and direct the AO to delete the impugned addition on account of receipts from Atos India towards project-related services pertaining to Standard Chartered Bank Project. Taxability of receipts from Atos India for the support services pursuant to the Regional Service Agreement - AO only referred to the Regional Support Agreement entered by the assessee with Atos India, but neither analysed the various services rendered by the assessee under the aforesaid agreement nor analysed the terms of the agreement to come to the conclusion that the receipts are in the nature of Royalty and/or Fees for Technical Services under the Act and the DTAA. DRP also did not analyse any of the above aspects and rejected the objections filed by the assessee by merely placing reliance upon its directions rendered in assessee s own case for the assessment year 2014-15, wherein this issue was not involved. Since the factual aspect pertaining to the taxability of receipt under the Regional Service Agreement has not been properly examined by any of the lower authorities vis- -vis the terms of the agreement and services rendered therein, we deem it appropriate to remand this issue to the file of AO for de novo adjudication - Assessee ground allowed for statistical purposes. Short grant of credit of TDS - This issue is restored to the file of the AO with the direction to grant TDS credit, in accordance with the law, after conducting the necessary verification.
Issues Involved:
1. Classification of receipts as 'Royalty' under Section 9(1)(vi) of the Income Tax Act, 1961, and Article 12 of the India-Singapore DTAA. 2. Classification of receipts as 'Fees for Technical Services' under Section 9(1)(vii) of the Income Tax Act, 1961, and Article 12 of the India-Singapore DTAA. 3. Classification of receipts as 'Business Profits' under Article 7 of the India-Singapore DTAA. 4. Short credit of Tax Deducted at Source (TDS). 5. Levy of interest under Section 234B of the Income Tax Act. 6. Initiation of penalty proceedings under Section 270A of the Income Tax Act. Summary: 1. Classification of Receipts as 'Royalty': The assessee argued that the payments received from Atos India for project support and regional support services should not be treated as 'Royalty' under Section 9(1)(vi) of the Income Tax Act and Article 12 of the DTAA. The Tribunal noted that similar issues were decided in favor of the assessee in previous assessment years (2014-15 and 2015-16), where it was held that payments for project-related services do not qualify as 'Royalty'. The Tribunal upheld this view, stating that the services provided were IT infrastructure management and mailbox hosting services, which do not constitute 'Royalty'. 2. Classification of Receipts as 'Fees for Technical Services': The Tribunal examined whether the payments received could be classified as 'Fees for Technical Services' (FTS) under Article 12(4) of the DTAA. It concluded that the services rendered by the assessee did not make available any technical knowledge, experience, skill, know-how, or process to Atos India, which would enable them to apply the technology independently. Therefore, the payments did not qualify as FTS and were instead treated as business profits. 3. Classification of Receipts as 'Business Profits': The Tribunal held that the payments received by the assessee should be treated as business profits under Article 7 of the DTAA and are not taxable in India in the absence of a Permanent Establishment (PE) in India. 4. Short Credit of TDS: The issue of short credit of TDS amounting to Rs. 63,14,556 was remanded to the Assessing Officer (AO) for verification and granting of appropriate credit in accordance with the law. 5. Levy of Interest under Section 234B: The Tribunal noted that the levy of interest under Section 234B is consequential in nature and allowed this ground for statistical purposes. 6. Initiation of Penalty Proceedings: The Tribunal found the initiation of penalty proceedings under Section 270A to be premature and dismissed this ground. Conclusion: The appeal by the assessee was partly allowed for statistical purposes, with directions for de novo adjudication on certain issues and verification of TDS credit. The Tribunal's order was pronounced in the open Court on 31/03/2023.
|
