2024 (9) TMI 1098 - AT - Income Tax

Taxability of Income in India - Addition made on account of Management Service Fees - HELD THAT - Quality Development and Training services are concerned, the assessee has offered the same to tax, conceding that there has been transfer of knowhow and technology. Information Technology Services, the CIT(A) after examining the same has come to the conclusion that since make available criteria as specified under India-Singapore DTAA is not satisfied, hence, fee payable in respect of information technology services is not taxable in India. Other services i.e. planning analysis/corporate development, human resources and finance, the CIT(A) has upheld the addition solemnly on the ground that the assessee has not furnished complete details, therefore, exact nature of services could not be determined. Contention of the assessee is that all relevant documents were furnished before the AO, as well as the CIT(A), but the same have not been examined by the First Appellate Authority. Taking into consideration entire facts, we deem it appropriate to restore this issue back to the file of the CIT(A), for re-examine the documents already furnished by the assessee available on record and also any other documentary evidence/submissions furnished by the assessee to substantiate its claim. CIT(A), after examining the documents shall pass a speaking order with regard to Planning Analysis/Corporate Development Services, Human Resources Finance Services, in accordance with law.

Issues:
Appeal against addition made on account of Management Service Fees under India-Singapore DTAA for Assessment Year 2019-20.

Analysis:
The appeal was filed by the assessee against the addition made on account of Management Service Fees under the India-Singapore Double Taxation Avoidance Agreement (DTAA) for the Assessment Year 2019-20. The assessee, a tax resident of Singapore, received Management Service Fee from its associated enterprises in India. The services rendered included Information Technology Services, Planning and Analysis, Human Resources, Finance Services, and Quality Development and Training. The appellant contended that only the fees related to Quality Development and Training services involved transfer of knowhow and technology and were taxable. The CIT(A) partially allowed relief for Information Technology Services but upheld the addition for other services due to lack of complete details provided by the assessee. The appellant argued that all relevant documents were submitted but not examined by the authorities. The Tribunal decided to remand the issue back to the CIT(A) for re-examination of the documents to determine the taxability of Planning & Analysis/Corporate Development, Human Resources, and Finance Services.

The Tribunal noted that the CIT(A) had correctly determined that the make available criteria for Information Technology Services were not satisfied under the India-Singapore DTAA, hence not taxable in India. However, for Planning & Analysis/Corporate Development, Human Resources, and Finance Services, the addition was upheld due to incomplete details provided by the assessee. The Tribunal directed the CIT(A) to re-examine the documents already furnished by the assessee to make a well-founded decision in accordance with the law. The appeal of the assessee was allowed for statistical purposes, indicating a procedural victory without altering the tax liability.

In conclusion, the Tribunal's decision highlighted the importance of providing complete and detailed information to substantiate claims regarding the taxability of services under DTAA provisions. The case underscores the need for thorough documentation and examination by authorities to determine the tax implications accurately. The remand back to the CIT(A) signifies the opportunity for the appellant to present all relevant evidence for a fair assessment of the tax liability concerning the Management Service Fees provided to associated enterprises in India.

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