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TMI Blog2020 (9) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... to see if it resembles the quality specified by the assessee. For rendering aforesaid service, no technical knowledge is required. Tribunal on the basis of meticulous appreciation of evidence on record, has recorded a finding that non-resident company is not rendering any consultancy service to the assessee. The same would not fall within the services contemplated under Section 9(1)(vii) - The aforesaid finding of fact is based on meticulous appreciation of evidence on record and cannot be termed as perverse. It is pertinent to mention here that even in memo of appeal, no ground has been urged with regard to perversity of the aforesaid finding. - Decided against the revenue. - I.T.A. NO. 383 OF 2012 - - - Dated:- 10-9-2020 - THE HON'BLE MR. JUSTICE ALOK ARADHE And THE HON'BLE MR. JUSTICE H.T.NARENDRA PRASAD FOR THE APPELLANTS : SRI. K.V. ARAVIND, ADV. FOR THE RESPONDENT : BY SRI. T. SURYANARAYANA, ADV. JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2007-08. The appeal was admitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in order to establish that the consideration payable for services rendered by non resident company under the terms of the agreement is not in the nature of Fee towards technical services within the meaning of Explanation 2 to Section 9(1)(vii) of the Act. Accordingly, the appeal was dismissed. The assessee thereupon filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short). The tribunal by an order dated 29.06.2012 inter alia held that non resident company is not involved either in identification of the exporter or selecting the material and negotiating the price. It was further held that the quality of material is already determined by the assessee and non resident company is only required to make physical inspection of the material to examine if it resembles the quality specified by the assessee. In other words, it only has to compare the material with samples provided by the assessee and for this activity no technical knowledge is required. Accordingly, it was held that the non resident company is not providing any technical services and the payments made by the assessee to non resident company do not fall within the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue as perverse and even in the memo of appeal no perversity has been even alleged. Therefore, no substantial question of law arises for consideration in this appeal as the finding recorded by the tribunal is a pure finding of fact. Alternatively, it is submitted that even if the tax has to be deducted at source with retrospective effect, the liability cannot be put on the assessee with retrospective effect. In support of aforesaid submissions, reliance has been placed on decisions in 'THE DIRECTOR OF INCOME-TAX ANR. VS. M/S SASKEN COMMUNICATION', ITA NO.241/2011 DATED 10.06.2020, 'DIRECTOR OF INCOME TAX (INTL. TAX.)- II VS. PANALFA AUTOELECTRIK LTD., ITA NO.292/2014 DATED 22.07.2014, 'COMMISSIONEROF INOCME TAX-IV VS. M/G GRUP ISM P. LTD., ITA NO.325/2014 DATED 29.05.2015, 'COMMISSIONER OF INCOME-TAX, CHENNAI VS. FARIDA LEATHER COMPANY', (2016) 66 TAXMANN.COM 321 (MADRAS) and 'THE COMMISSIONER OF INCOME TAX-11 VS. M/S NGC NETWORKS (INDIA) PVT. LTD.', IA NO.397/2015 DATED 29.01.2018. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. The singular question, which arises for consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodity would ascribe to it. [SEE: 'ORIENT TRADERS VS. COMMERICAL TAX OFFICER, TIRUPATI', (2008) 14 SCC 440, 'STATE OF MADHYA PRADESH VS. MARICO INDUSTRIES LTD.,', AIR 2016 SC 3462 and 'VIJAYA GOPALA LOHAR VS. PANDURANG RAMCHANDRA GHORPADE AND ORS.', AIR 2019 SC 3272]. It is pertinent to mention here that expression 'managerial', 'technical' and 'consultancy services' employed in Explanation 2 to Section 9(1)(vii) of the Act have neither been defined under the Act nor under the general clauses Act, 1987. Therefore, the aforesaid words have to be understood in the sense in which they are understood by the persons engaged in the business and by the common man who is aware and understands the same. The Delhi High Court in 'CIT VS. BHARTI CELLULAR LTD.,', (2009) 319 ITR 139 (DELHI) as well as in the case of PANALFA supra dealt with word 'consultancy' and held that the word 'consultancy' has been defined in the Black's Law Dictionary, 8th Edition as an act and advise of someone (such as a lawyer). It has further been held that it may mean a meeting in which parties consult or confer. For consultation service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the non- resident company is required to ensure coordination with the suppliers, so that goods are shipped on time and to undertake necessary coordination and ensure that correct quantity and quality of goods are shipped to assessee. It is pertinent to mention here that the assessee in consultation with the exporters identifies the manufacturers as well as the quality and price of the material to be imported. The non-resident company is no where involved either in identification of the exporter or in selecting the material and negotiating the price. The quality of material is also determined by the assessee and the non-resident Indian company is only required to make physical inspection to see if it resembles the quality specified by the assessee. For rendering aforesaid service, no technical knowledge is required. The tribunal on the basis of meticulous appreciation of evidence on record, has recorded a finding that non-resident company is not rendering any consultancy service to the assessee. Therefore, the same would not fall within the services contemplated under Section 9(1)(vii) of the Act. The aforesaid finding of fact is based on meticulous appreciation of evidence on r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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