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TMI Blog2019 (7) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... f repair work which would accrue in wind turbine, concluded that the repairs are not mundane repairs but require highly sophisticated techniques and accordingly held that it is in the nature of technical services. After analysing the type of services rendered by M/s.E Y at UAE, the AO held that the market study is in the nature of technical services and the remittance is to be treated as Fee for Technical Services. We find that there is no error in the said conclusion especially when it has been rendered on appreciation of the scope of work based on the documents placed by the assessee before the AO. Therefore, we find that the conclusion arrived at by the two authorities and the Tribunal on all the three issues does not call for interference. Delhi Court in Havells India Ltd [ 2012 (5) TMI 449 - DELHI HIGH COURT] after analysing Section 9(1)(vii)(b) has held that in order to get the benefit of the first exception it is not sufficient for the assessee to prove that the technical services were not utilised for its business activities of production in India, but it is further necessary for the assessee to show that the technical services were utilised in a business carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Article 7 of DTAA between India and Srilanka and Section 9(1)(vii) of the Act? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the findings of the lower authorities as the Appellant is an assessee in default with respect to the payment of ₹ 3,34,414/- paid towards the service rendered by M/s.Wingtec Rotor Services-Germany, especially when the entire transaction has occurred outside India and thereby exigible to tax as per Article 7 of DTAA and Section 9(1)(vii) of the Act between India and Germany? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the findings of the lower authorities as the Appellant is an assessee in default with respect to the payment of ₹ 3,34,414/- paid towards the consultancy service rendered by M/s.Earnst Young especially when the entire transaction has occurred outside India and thereby exigible to tax as per Articles 5, 7 and 14 of DTAA between India and UAE? 3.The assessee has its principal business of manufacturing and supplying wind turbines. During the year 2013-14, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces may also be taxed in the contracting State in which they arise, according to the law of that State, but if the beneficial owner of the royalties or Fees for Technical Services is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amount of the royalties or Fees for Technical Services. It was stated that the services are rendered by M/s.WFPL to the assessee who is based in India and as per Clause (2) of Article 12 of DTAA the payments made towards services rendered by M/s.WFPL are liable to withholding tax at 10%. Without prejudice to the above finding, the Assessing Officer stated that the payments made by the assessee are also in the nature of royalty as it involves the payments for right to use industrial, commercial or scientific equipment, as the payment was towards hiring of cranes and hence in the nature of right to use Industrial, commercial equipment and hence applicable rate of TDS is at 10%. 5.The other issue was with regard to the repair service extended by M/s.Wingtec Rotor Service, Germany (WRS). The assessee engaged M/s.WRS for carrying out repair on the rotor blades by deploying its service technicians ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t held that services are rendered by M/s.WFPL to the assessee who is based in India and hence as per Clause (2) of Article 12 of India-Srilanka DTAA, the payments made towards services rendered by M/s.WFPL are liable to withholding tax at 10%. Accordingly the finding of the Assessing Officer was upheld. With regard to repair services rendered by M/s.WRS, Germany, the CIT(A) referred to Article 12 of India-Germany DTAA and held that the services being in the nature of Fee for Technical Services is rightly treated as income chargeable to tax in India and hence liable to TDS. With regard to payments effected to M/s.E Y for market study for Wind Energy in UAE, the CIT(A) held that the market study being in the nature of Technical Services, the remittance is treated as Fee for Technical Services, the income in the hands of M/s.E Y and is liable to TDS. Accordingly, the appeal was dismissed. Aggrieved by the same, the assessee preferred an appeal before the Tribunal. The Tribunal affirmed the order passed by the CIT(A) on all the three issues and this is how the assessee is before us by way of this appeal. 7.The learned counsel appearing for the assessee contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to M/s.E Y are in the nature of business profits would fall under the purview of Article 5, 7 and 14 of Indo UAE DTAA and such payments cannot be taxed in India. In support of his contentions, reliance was placed in the decision of Evolv Clothing Company Pvt. Ltd. vs. Assistant Commissioner of Income Tax ([2018] 407 ITR 72(Mad)) and Principal Commissioner of Income Tax vs. Motif India Infotech (P) Ltd. ([2018] 409 ITR (Guj)) . 8.The learned Senior Standing Counsel appearing for the revenue submitted that the Assessing Officer, CIT(A) and the Tribunal have carefully analysed the terms and conditions of the contract as contained in the work order and have rendered a factual finding and this Court exercising jurisdiction under Section 260A of the Act will decide the substantial question of law and will not embark upon a fact finding exercise. It is submitted that the India-DTAA is very widely couched and worded more or less on the lines of the Income Tax Act, 1961. The DTAA does not have a make available clause and therefore the finding rendered by the authorities and the Tribunal are legally valid. In this regard, the learned counsel has drawn the attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Srilanka. If we examine the terms and conditions mentioned in the work order, more particularly the scope of work and the various clauses contained therein, we have no hesitation to hold that the nature of activity done in Srilanka is not mere construction or assembly or mining like project. Admittedly, the installation of wind turbine is a highly skilled and technical work. The various clauses in the work order clearly demonstrates the scope of work and therefore, we cannot but hold that the Assessing officer was right in concluding that the services rendered by M/s.WFPL is in the nature of Fee for Technical Services. Similarly, with regard to the services rendered by M/s.WRS, Germany was stated by the assessee to be a repair work. The Assessing Officer after taking note of what is the type of repair work which would accrue in wind turbine, concluded that the repairs are not mundane repairs but require highly sophisticated techniques and accordingly held that it is in the nature of technical services. After analysing the type of services rendered by M/s.E Y at UAE, the Assessing Officer held that the market study is in the nature of technical services and the remittance is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's appeal on the ground that the services were utilized outside India in a business or profession carried outside India for the purpose of earning any income outside India. The revenue's appeal before the Tribunal was rejected, against which an appeal was filed to the High Court. The appeal was dismissed by the High Court and in so doing pointed out that the CIT(A) and the Tribunal have accepted the assessee's factual assertion that the payments were for technical services provided by a non-resident for providing services to be utilized for serving the assessee's foreign clients and thus, the Fees for Technical Services was paid by the assessee for the purpose of making or earning any income from any source outside India and clearly the source of income, namely, the assessee's customers were the foreign based Companies. This decision also is clearly distinguishable on facts as noted by us above and does not render assistance to the case of the assessee. 13.In the case of Havells India Ltd , one of the substantial question of law framed for consideration was whether the Tribunal is right in holding that Section 40(a)(ia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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