9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 296 - HC - Income TaxIncome accrued in India - Benefit of DTAA between India and USA - rightful owner of the remittances - fees for technical service (FTS) - Payment for certification of Diamonds - concurrent findings of fact by the authorities is that there is a take in window where articles are delivered but the service agreement is between the assessee and GIA USA - substantial question of law - HELD THAT - Apparently reading the orders under challenge would indicate that based on factual appreciation especially the condition in the customer service agreement, the bank invoice and the Bank remittance advice a finding of fact has been arrived at that the assessee s case was protected under the India-USA DTAA and that mere rendering of services cannot be roped into FTS unless the person utilising the services is able to make use of the technical knowledge etc. Simple rendering of services as in the present case is not sufficient to qualify as FTS . For the reasons as aforesaid no substantial questions of law is framed.
Issues Involved:
1. Entitlement to the benefit of Double Taxation Avoidance Agreement (DTAA) between India and USA. 2. Rendering of services by an independent corporate entity and routing of payment. 3. Beneficial ownership and applicability of DTAA. 4. Currency of payment and location of service. 5. Classification of services as fees for technical service (FTS). 6. Clerical errors in statutory forms and payment instructions. Summary: 1. Entitlement to DTAA Benefits: The Tax Appeal raised whether the assessee is entitled to the benefit of the DTAA between India and USA based on the Tax Residency Certificate (TRC) and Form No. 10F furnished by GIA Inc. USA, despite the services not being rendered by the USA entity. The Tribunal confirmed that the invoices for payment were issued by GIA USA, and remittances were made to the offshore Bank account of GIA USA, with no direct relationship with GIA Hong Kong Laboratory Ltd. 2. Independent Corporate Entity and Routing of Payment: The Revenue contended that the service was rendered by GIA Hong Kong Laboratory Ltd., a subsidiary of GIA Inc. USA, and payments were merely routed through GIA Inc. USA. The Tribunal found that the remittances were made to GIA USA's offshore bank account, and the clerical error in naming the Hong Kong agency did not affect the actual beneficiary being GIA USA. 3. Beneficial Ownership and DTAA Applicability: The Tribunal held that the beneficial owner of the payment was GIA Inc. USA, not GIA Hong Kong Laboratory Ltd. The Tribunal noted that the agreement was with GIA USA, and the remittances were made to GIA USA's offshore bank account, thus entitling the assessee to the benefits of the DTAA between India and USA. 4. Currency of Payment and Service Location: The Revenue argued that payments made in Hong Kong dollars indicated services rendered at GIA Hong Kong Laboratory. The Tribunal found that the remittances were made to the offshore bank account of GIA USA, and the clerical error in the forms did not change the fact that the services were covered under the India-USA DTAA. 5. Classification as Fees for Technical Service (FTS): The Tribunal concluded that the services provided did not qualify as fees for technical service (FTS) under the DTAA between India and USA. The Tribunal observed that the certification of diamonds did not involve the "make available" of technical services, know-how, or knowledge exchange. 6. Clerical Errors in Statutory Forms: The Tribunal accepted the assessee's explanation of clerical errors in Form 15CA/15CB, where the beneficiary was mistakenly mentioned as GIA Hong Kong Laboratory Ltd. instead of GIA USA. The Tribunal found that the remittances were actually made to GIA USA's offshore bank account, and the error did not affect the applicability of the DTAA benefits. Conclusion: The High Court dismissed the appeal, holding that the Tribunal's findings were based on a correct appreciation of facts and that no substantial question of law was involved. The appeal was dismissed as the assessee was entitled to the benefits of the DTAA between India and USA.
|
