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TMI Blog2015 (9) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-11, the Revenue has assailed the order of Commissioner of Income Tax (Appeals) on following grounds: 1) The Learned CIT(A) erred in condoning the delay in filing appeal u/s. 248 extending upto 619 days and erred in concluding that there is sufficient cause for not filing the appeal in time. 2) The Learned CIT(A) erred in not granting opportunity to assessing officer during the appellate proceedings and not noting that no evidence was filed that any application u/s. 195 or 197 of the IT Act was filed by the assessee even subsequently while making the payments to these companies, viz. KTGY Inter Associates Ltd. and P 49 Deesign and Associates Co Ltd of Thailand at the subsequent stages of the contract. 3) The Learned CIT(A) erred in concluding that the appellant was not required to deduct tax on payment made to Thailand parties as these are not taxable in India as per DTAA between India and Thailand by only considering that there is no separate Article dealing with Fees for Technical Services and thereby not considering Article 22 of the DTAA. 4) The Learned CIT(A) erred in concluding that the appellant was not required to deduct tax on payment made to Thailand parties by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned foreign consultants for the services rendered by them at the hotel project sites of the assessee. The contention of the assessee is that the payments for the services rendered by the aforesaid foreign consultants does not fall within the ambit of term 'fees for technical services'. Therefore, the same are not liable to be taxed u/s. 9(1)(vii)(b) of the Act. Since, the assessee deducted tax at source on the aforesaid payments, the assessee filed appeals before the Commissioner of Income Tax (Appeals) u/s. 248. The Commissioner of Income Tax (Appeals) vide impugned order common for assessment years 2009-10 and 2010-11 held that the services rendered by Singapore parties i.e. Andy Fisher Workshop Pte. Ltd. and FBEYE International Pte. Ltd., Singapore fall within the ambit of the provisions of section 9(1)(vii)(b), therefore, the assessee was liable to deduct tax at source on payments made to them. However, in respect of payments made to Thailand Parties i.e. KTGY Inter-Associates Ltd., Thailand and P49 Deesign and Associate Co. Ltd., Thailand, the payments are not taxable in view of India-Thailand DTAA. Against these findings of the Commissioner of Income Tax (Appeals) both, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PN/2014 for the assessment year 2009-10 decided on 28-08-2014. 5. On the other hand Shri A.K. Modi representing the Department vehemently defended the findings of Commissioner of Income Tax (Appeals) with respect to Singapore firms. In respect of the appeals of the Department the ld. DR submitted that although the issue has been decided in favour of the assessee in ITA No. 2509/PN/2012 and 1047 to 1056/PN/2014 (supra), necessary verification have not been carried out by the Commissioner of Income Tax (Appeals) to ascertain the facts. 6. We have heard the submissions made by the representatives of rival sides and have perused the impugned order. We have also examined the decisions on which the ld. AR has relied. We will first take up the appeals of the assessee. The Commissioner of Income Tax (Appeals) has held that the payments made to Singapore parties fall within the ambit of 'fees for technical services'. The Singapore parties have transferred architectural designs to the assessee. The Singapore parties also permited the assessee to apply technology of whatever nature contained in designs and plans. The payments are covered and taxable under second limb of Clause (c) of Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pore parties amounts to transfer of technical know-how technology to the assessee. The assessee has placed on record the agreement entered between the assessee and Andy Fisher Workshop Pte. Ltd., Singapore. The said agreement gives the detail of scope of work, schedule of payment of fees, responsibilities of the parties, pre-conditions for termination of agreement, general conditions, copyrights etc. According to the agreement, the Singapore firm has to make concept design. On approval of the concept design the consultant has to commence with schematic design. The next stage is detailed designing of the project. At the time of execution, the consultant would review the construction for material selection and ensure design intent is maintained. The fees is to be paid to the consultant based on completion of work stage. The consultant would visit the site for meetings, presentations and review of the projects. The Clause 15 of the agreement speaks about copyright. The same reads as under: "The Copyright in all documents and drawings prepared by the Design Consultant and in any work executed there from remain the property of the Design Consultant. In any occasion this appointment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to insure that the designed area represents the finished product CONTRACT DOCUMENTS PHASE Construction Documents 1) Based on the approved initial Design Development submissions, designer shall prepare documentation consisting of drawings details and specifications to set forth in sufficient detail the requirements for the special finishes of the Project Areas. 2) Designer shall prepare a colour finish schedule and prepare a corresponding finish notebook including samples of all applies finishes and materials. 3) Designer shall prepare material specifications of interior specialty items and finishes for inclusion into Architect's project manual. 4) These drawings, details and specifications will be sufficient to convey the entire design intent, but it is intended and it will be required that they be supplemented by the Architect and Quantity Surveyor and incorporated into their documents for tendering and construction purposes. 5) Designer shall be responsible for explaining design intent and construction drawings to Contractor selected by Client and technical presentation. 6) The phase of work will be deemed as being completed upon submission of the aforementi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason for delay in filing of the appeal which is of prime importance. The Courts have been taking liberal view in condoning substantial delay where the delay has been explained. On the other hand, minor delay in filing of the appeal is not pardoned where it has not been sufficiently explained or delay is attributable to utter negligence or lackadaisical attitude of appellant. There are catena of judgments wherein the Hon'ble Supreme Court of India and various Hon'ble High Courts have reiterated the principle for condoning delay by following liberal approach. The Hon'ble Apex Court in the case of Ram Nath Sao Vs. Gobardhan Sao reported as 2002 (3) SCC 195 has held: "There cannot be a straightjacket formula for accepting or rejecting explanation furnished for the delay caused in taking steps. But one thing is clear that the Courts should not proceed with the tendency of finding fault with the cause shown and reject the petition by a slipshod order in over jubilation of disposal drive. Acceptance of explanation furnished should be the rule and refusal an exception more so when no negligence or inaction or want of bona fide can be imputed to the defaulting party. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above finding of the CIT(A), we have perused the scope of work undertaken by the three recipient concerns as per the respective agreements, whose copies have been placed in the Paper Book. It is quite evident from the perusal of the agreements as also the scope of work enumerated by the CIT(A) in para 2.1 of his order that it involved provision of architectural, designs and drawings services. Factually speaking, the aforesaid finding of the CIT(A) that the services rendered by the recipient concerns to the assessee company in India fall for consideration as "fee for technical services" u/s 9(1)(vii)(b) of the Act is not in dispute, and therefore, we do not dwell at length on this aspect of the matter. In any case, we are in agreement with the above findings of the CIT(A), having regard to the scope of work envisaged in the respective agreements with the recipient concerns. 12. On the basis of the aforesaid, the CIT(A) took note of assessee's plea that having regard to the provisions of Indo- Thailand DTAA, the taxability of such incomes is to be governed by the terms of DTAA between India and Thailand because the same was favourable and envisaged no tax liability in comparison ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recipient concerns have a permanent establishment in India or that they were present in India for a period exceeding 183 days during the previous year relevant to the assessment year under consideration. In this context, learned counsel for the assessee furnished appropriate certificates from the three recipient concerns tabulating the period for which their representatives were present in India during the relevant period which show that the presence in India was for less than 183 days. Therefore, on this aspect also, we find no merit in the plea of the Revenue and the discussion made by the CIT(A) in para 3.8 of his order in this context is hereby affirmed. 15. Similarly, Revenue has raised a plea that the CIT(A) has not considered the taxability of the impugned income as 'business income' under Article 7 of the DTAA. Article 7 of the DTAA deals with business profits to be considered for taxation. The said Article states that the income or profits of the enterprise of a contracting State shall be taxable only in that State unless the enterprise carries on business in the other contracting State through a Permanent Establishment (PE) situated therein. The taxability is only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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