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TMI Blog2016 (6) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ince there was no contract or the agreement between the assessee and M/s. Verizon Hongkong Ltd., a resident of Hongkong, and the leased line interconnectivity charges were reimbursed to Meridian IQ Asia Limited, Hongkong, which was invoiced by M/s. Verizon Hongkong Ltd., the same is not chargeable to tax in India and as such, no tax is required to be deducted at source. Following the order passed by the coordinate Bench of the Tribunal in the judgment cited as Wipro Ltd. (2003 (4) TMI 223 - ITAT BANGALORE-C), we are of the considered view that the services offered and availed by the assessee company cannot be termed as technical services by any stretch of imagination and the amount in question paid by the assessee is not taxable, hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of leased line to M/s. Verizon Hong Kong Ltd., a resident of Hong Kong, being charges for the access of leased line and managed services thereon. The assessee was called upon to explain as to why the said amount be not disallowed under Section 40(a)(i) of the Income-tax Act, 1961 (hereinafter the Act ) as TDS was not deducted on this amount as per provisions of section 195 of the Act. Assessee relied upon the order passed by the ITAT, Bangalore in the case of Wipro Ltd. vs. ITO (2003) 80 TTJ (Bang) 191 in not deducting the TDS. However, the Assessing Officer has declined to accept the contentions raised by the assessee and by relying upon the decision rendered by ITAT, Chennai in case of Verizon Communications Singapore Pte Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terconnectivity charges and usage of leased line to M/s. Verizon Hong Kong Ltd., a resident of Hong Kong, was to be classified either as royalty or income attributed to a Permanent Establishment in India? 7. Identical issue has come up before ITAT, Bangalore C Bench in the case cited as Wipro Ltd. (supra). Operative part of which is reproduced for ready reference as under :- Income deemed to accrue or arise in India-Fees for technical services/ royalty-Payment for transmission of data and software through up link and down link services-Assessee engaged, inter alia, in the business of development of software providing on line software services through customer based circuits with the help of VSNL and foreign telecom companies o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arying volume of services utilized at various point of time; that there is no evidence on record that the assessee was provided with any technology or the technical services for encapsulation or amplification or conversion of light signal into magnetic signal or vice versa or any evidence for hiring or utilization of satellite by the appellant. 9. When the aforesaid contentions of the ld. AR of the assessee are examined in the light of the assessment order passed in this case by the AO, it is apparently proved that the AO has not based his finding on any evidence available on record to reach out the conclusion that the assessee was provided with any technology or technical services for encapsulation or amplification or conversion of ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3)(b) of the India Singapore Tax Treaty and under section 9(1)(vi) of the Income Tax Act, 1961. In the case of the assessee the liability to deduct TDS is more strict as in absence of any DTAA with Hongkong only the provisions of Sec 9 of Income Tax Act, 1961 will apply. Therefore, all income to any non-resident accruing or arising whether directly or indirectly through or from any business connection in India, or through or from any property or through or from any asset or source of income in India shall be taxable in India. In this case the leased line payment is source of Income for the payee in India These receipts for the payee even fall u/s 9(1)(vii) as they are for technical services given by the payee and which are being utilized i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was invoiced by M/s. Verizon Hongkong Ltd., the same is not chargeable to tax in India and as such, no tax is required to be deducted at source. 11. Following the order passed by the coordinate Bench of the Tribunal in the judgment cited as Wipro Ltd. (supra), we are of the considered view that the services offered and availed by the assessee company cannot be termed as technical services by any stretch of imagination and the amount in question paid by the assessee is not taxable, hence, the assessee has no liability to deduct the tax at source under section 195 of the Act. 12. In view of what has been discussed above, we hereby allow the present appeal filed by the assessee. Order pronounced in open court on this 26th day of A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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