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TMI Blog2018 (6) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP grossly erred in law and on the facts and circumstances of the case in confirming and addition of Rs. 18772897/- in the income of the appellant. 2. That the AO/ DRP grossly erred in law and on the facts and circumstances of the case in making an addition of Rs. 18772897/- to the income of the appellant thereby in treating the income received by the appellant from its Indian customers as Fees for Technical Services (FTS) ignoring the provisions of Article 13 of India-UK Double Taxation Avoidance Agreement (India-UK DTAA). 3. That the AO/ DRP grossly erred in law and on the facts and circumstances of the case in treating the amount received by the assessee from its Indian Customers as its income as the same has not accrued or arisen in India. 4. That on the facts and in law, the ld AO erred in initiating penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961. 5. That the ld AO has erred in levying interest under section 234B and 234C of the Act." 3. The brief facts of the case shows that the assessee is a company filed its return of income on 13.09.2014 declaring total income at Rs. Nil. The assessee is foreign company resident of UK. It is claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; test and therefore, the decision of the ld AO is justified. Consequently, final order was passed by the ld AO on 25.08.2017 taxing the above sum as fees for technical services therefore, the assessee is in appeal before us. 4. The ld AR submitted a detailed note on nature of services provided to Indian customers at page NO. 4 of his paper book. He submitted that the assessee has provided the services of supervision of weighing, sampling and control cargo determination, sample preparation and analysis. It is also carried out crude oil vessel inspection. It was also carried out analysis of platinum and copper concentrate. He further stated that in most of cases the place of services rendered is outside India. He further stated that this company issues certificate to the recipient of the services for the work carried out. The payment received by the assessee is outside India. He further referred to various invoices and certificate issued and submitted that there is no way if the services are not rendered by the assessee it can be done by the assessee himself. With respect to the various certification he stated that these are the specified certificates issued by the assessee to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws as well as according to the Indo-UK Double Taxation Avoidance Agreement. There is no dispute between the parties that the above sum is chargeable to tax according to the provisions of domestic tax laws. Therefore, only issue to be examined is whether the above sum can be taxed in India as per the Articles of Indo-UK Double Taxation Avoidance Agreement. The claim of the assessee is that above sum is chargeable to tax as fees for technical services as per article 13(4)(c) of DTAA if the assessee „makes available‟ technical, knowledge, experience, skill etc to the Indian entities. The ld Assessing Officer has agreed that the services provided by the assessee are technical in nature. According to him as the assessee is also carrying analysis, testing and inspection, hence, it is providing the consultancy services also. He therefore, held that on close scrutiny of nature of services the service recipient get equipped to carry on that business model or service model on their own without reference to the service provider. Therefore, according to him such services fall within the ambit of making available technical knowledge under the tax treaty. The ld Dispute Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar service provider. Inspection and survey of imported/exported cargo and certifying in relation to the quality and price, provision of such services does not make available technical knowledge, experience, skill, know-how or processes to the recipient of the service. Hence, we are of the opinion that the fees for technical services earned by the assessee is not chargeable to tax in India according to Article 13(4)(c) of the DTAA as these services are not made available to the Indian parties. Accordingly, we held that Rs. 18772897/- received by the assessee is not chargeable to tax in India. Accordingly, ground No. 1 to 3 of the appeal are allowed. 7. Ground No. 4 to 6 are now academic or consequential in nature therefore, they are not adjudicated and hence, dismissed. 8. In the result ITA No. 6365/Del/2017 is partly allowed. 9. Now we come to ITA NO. 4938/Del/2016 for AY 2010-11 against the order of the ld CIT(A)-43 dated 30.06.2016 wherein penalty levied by the ld AO u/s 271(1)(c) of the Act of Rs. 1715113/- is confirmed. 10. The assessee has raised the following grounds of appeal in ITA No. 4938/Del/2016 for the AY 2010-11:- "1. That on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r technical services. During the penalty proceedings assessee submitted its reply and submitted that it has not made such services available to the recipient to those services and therefore, it is not chargeable to tax in India as per article 13(4)(c) of the Act. The assessee further stated that it has neither furnished inaccurate particulars of the income and hence, not liable for penalty. The ld Assessing Officer rejected the contention of the assessee and held that the explanation furnished by the assessee is not satisfactory and levied the penalty of Rs. 1715113/-. The assessee carried the matter before the ld CIT(A), who confirmed the penalty as assessee did not file the copies of the agreement with the client. Therefore, he held that appellant had concealed the particulars of the income. 12. The ld Authorised Representative on appeal before us contesting the various grounds submitted that income of the assessee itself is not chargeable to tax in India. He submitted a paper book wherein, the nature of services rendered by the assessee to the customers is described. He submitted that such services are similar to the services in ITA NO. 6365/Del/2017 for AY 2014-15 in case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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