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TMI Blog2018 (4) TMI 1681X X X X Extracts X X X X X X X X Extracts X X X X ..... ture on its own without recourse to the service provider to fall within Article 12(4) of the India-US DTAA. The nature of services rendered does not indicate making available technical knowledge, skill, know-how etc. to the assessee. Thus, on the basis of the facts and circumstances of the case, payment to Flour Transworld Services Inc. does not qualify as fee for included services as per the provisions of the India-US DTAA. Although DR has argued vehemently against the action of the Ld. CIT (A) in deleting this addition, he could not point out any factual or legal inaccuracy in the finding recorded by the Ld. CIT (A). He also could not bring to our notice any judicial precedent in favour of the department. - Decided against revenue. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income declaring total income at Nil and book profit of ₹ 2,94,58,68,507/- for taxability u/s 115JB of the Act. Subsequently, the assessee s case was picked up for scrutiny. During the course of assessment proceedings, the Assessing Officer (AO) noted that during the year under consideration, the assessee had made the following payments to the two parties:- 1. Fluor Transworld Services Inc. ₹ 38,98,851 2. Furgo survey Ltd. ₹ 2,07,455 2.1 The Assessing Officer asked the assessee to explain as to why these payments may not be treated as fee for technical services having deemed to accrue or arise in India as per section 9(i)(vii) of the Act. The assessee was also asked to explain as to why it had not deducted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices Inc. but upheld the disallowance with respect to payment made to M/s Fugro Survey Ltd. 2.4 Now, the department has approached the Income Tax Appellate Tribunal (ITAT) and has challenged the deletion of ₹ 38,98,851/- by the Ld. Commissioner of Income Tax (A) in respect of payment made to M/s Fluor Transworld Services Inc. 3. The Ld. Senior Departmental Representative (Sr. DR) placed extensive reliance on the findings of the Assessing Officer in this regard and submitted that the Assessing Officer had given a concrete finding that the payment was in the nature of fee for technical services and, therefore, they fell under the definition of income deemed to accrue or arise in India in terms of provisions of section 9(i)(vii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vaporizers Recommend an optimum vaporizing scheme out of the above based on the evaluation Evaluate the techno-economic benefits of a scheme for generating power through the use of LNG, which involved the following: Study the potential of reducing the in-plant power generation capacity by 50 percent based on 2.5 MMTPA annual capacity of the LNG terminal Study the implications of a scheme that does not restrict the quantum of power being generated assuming the surplus power would be exported. 5.2 The AO disallowed the claim of deduction under section 40(a)(i) of the Act holding that the payments were in the nature of fee for technical services under the Act and accordingly, tax should have been withheld on the same. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived in connection with rendering of technical or consultancy services: which are ancillary and subsidiary to the application or enjoyment of right in any patent, trademark, design or model, plan or secret formula or process or on any information concerning industrial, commercial or scientific experience; or which make available technical knowledge, experience, skill, know-how or processes or consist of the development and transfer of a technical plan or design. 5.7 It is our considered opinion that the provisions of the India- US treaty provide for a restrictive meaning of fee for included services vis-a-vis the meaning of fee for technical services under the Act in as much as only those technical/consultancy services which are an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the MOU, technology will be considered to be made available when the person acquiring the service is able to apply such technology on his own. 5.10 On the basis of details furnished by the assessee along with the copy of the letter of award issued to M/s Fluor Transworld Services Inc. USA, it may appear that the same involves use of technical knowledge or skill and will qualify as fees for technical services, as defined in Explanation 2 to section 9(i)(vii) of the Act. However, Article 12(4) of the India-USA DTAA dealing with fee for included services requires that technical knowledge, experience skill etc as provided in the definition of the term fee for technical services should be made available to the recipient of such servic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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