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TMI Blog2018 (2) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... e is in the nature of commission to be taxed as business income and not as fees for technical services . In the course of hearing before us, no decision to the contrary has been brought out by the Revenue. For all the said reasons, we are unable to uphold the stand of the Assessing Officer that the impugned referral fee was a consideration in the nature of fees for technical services . Another factual aspect which is not in dispute is that CSDB has no PE in India and also the fact that assessee s PE in India i.e., Mumbai bank branch had no role to play in the performance of the referral activity in question. Neither the discussion in the draft assessment order and nor in the course of hearing before us any credible assertions to the contrary has been brought out by the Revenue. Thus, considering that the referral activity was undertaken outside India and assessee s Mumbai branch (PE) had no role to play in the performance of the referral activity, the referral fee of ₹ 18,27,90,578/- earned by CSDB could not be construed to be attributable to assessee s PE in India and thus, the DRP rightly applied Article 7 of Indo- Swiss Double Taxation Avoidance Agreement (DTAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has a bank branch office in India which is registered with the Reserve Bank of India. The assessee also has a branch in Dubai (hereinafter referred to as CSDB ). In so far as the dispute before us is concerned, the same relates to taxability of a sum of ₹ 18,27,90,578/- received by assessee s Dubai branch (CSDB) from the Indian company, which is an associate enterprise. Before the Assessing Officer, assessee canvassed that the said sum was received by CSDB for referring an Indian resident client to the Indian Company for bringing out issue of convertible bonds. The assessee contended that such referral fee received by CSDB was a business income not liable to tax in India because CSDB did not have a permanent establishment in India as recognised in Article 5 of the Indo-Swiss Double Taxation Avoidance Agreement (DTAA). The Assessing Officer however did not accept the stand of the assessee and instead held that the referral fee was liable to be taxed in India having regard to Section 5(2)(b) of the Act read with section 9(1)(i) of the Act. As per the Assessing Officer, since the referral fee was payable to CSDB in relation to the execution of transaction between Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue has also canvassed error on the part of the DRP in holding that the referral fee could not be considered to be attributable to assessee s PE in India. Notably, at the time of hearing, the Grounds of appeal raised by the Revenue have been reiterated by the Ld. CIT-DR but no specific argument, on facts or in law, has been led before us to assail the directions of the DRP. The learned DR has merely referred to the stand of the Assessing Officer, as manifested in the draft assessment order, specially the fact that the referral fee income has been held to be in the nature of fee for technical services . 5. On the other hand, learned representative for the assessee has defended the directions of the DRP, and, in particular pointed out that the following decisions clearly support the inference of the DRP that the referral fee in question cannot be construed to be in the nature of fee for technical services and that the same is merely in the nature of commission income. ( i) Cushman Wakefield (S) Pte. Ltd., 305 ITR 208(AAR) ( ii) CLSA Ltd., vs. ITO (International Taxation), 56 SOT 254(Mum) ( iii) ADIT (IT) vs.Star Cruise India Travel Services (P) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - in question. In the face of such fact situation, we are unable to appreciate the stand of the Assessing Officer as to why the referral fee is to be construed as fees for technical services as understood for the purposes of the Act. As per the Assessing Officer, the referral fee has been paid by the Indian Company after the execution of the work of the referred client. Merely because the fee was payable by the Indian Company to CSDB after execution of the work of the referred client is no ground to determine the nature of the payment. In this context, the Authority for Advance Rulings in the case of Cushman Wakefield(S) Pte. Ltd., (supra) has dealt with a somewhat similar situation, wherein the applicant was a resident of Singapore, who had earned commission from an India based entity for having referred customers. As per the Authority for Advance Rulings, such referral fee , being in the nature of commission was to be treated as being in the nature of business income ; both, under the Act as well as under the Indo-Singapore Double Taxation Avoidance Agreement (DTAA), and not as fees for technical services . To the similar effect is the decision of the Mumbai Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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