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TMI Blog2021 (10) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... s and architect fees of Ps. 3,66,17,075/- made by the AO without appreciating that the three entities in Singapore provided design consultancy services for the residential project being developed by the assesses and that the services included supply of necessary designs and drawings in the nature of architectural, structural & MEP designs & drawings, thereby making available technical knowledge, experience, skill & knowhow or processes, which fall within the ambit of "fees for technical services" as per Income Tax Act as well as DTAA. " "2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance of consultancy fees and architect fees of Rs. 3,66,17,07s/- made by the AO witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to explain why the payment made to the non-resident entities should not be disallowed under section 40(a)(i) of the Act for alleged failure to deduct tax at source. 4. In submissions made before the assessing officer, the assessee objected to the proposed disallowance. It was submitted by the assessee that, since, the nonresident entities are resident of Singapore, the provisions of India-Singapore Double Taxation Avoidance Agreement (DTAA), being more beneficial, would be applicable. It was submitted, as per Article 12(4) of the tax treaty, unless, in course of providing any managerial/technical or consultancy services, technical knowledge, experience, skill, know-how or processes are made available to the recipient of such service, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, he deleted the disallowance made under section 40(a)(i) of the Act. 6. Strongly relying upon the observations of the assessing officer, learned departmental representative submitted, the non-resident entities have provided technical/consultancy services which enabled the assessee to apply them in its business. Thus, he submitted, not only the fees paid comes within the purview of FTS under section 9(1)(vii) of the Act, but also under Article 12(4) of the tax treaty as the services provided by the non residents made available technical knowledge, skill, know-how, process to the assessee to utilize in its business. Therefore, he submitted, the disallowance made by the assessing officer should be restored. 7. Drawing our attention to va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation, Article 12(4) of the tax treaty is reproduced hereunder:- "4. "The term fees for technical services as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services: (a) are ancillary......... (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein ; or (c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io Architecture + Urbanism Pte Ltd is concerned, it will provide an illustrative site/roof plan showing all the components of the project, general landscape, recommendation and overall infrastructure elements, such as, entry driveways and service circulation, Diagram showing each of the major public at 1:200 scale, image board to describe the architectural character of the project etc. The scope of work also requires the entity to prepare schematic design drawings, approved by the client, in case of minor adjustment. The terms of the agreement make it clear that the design, drawing, rendering, model, specification, electronic files including database and spreadsheets and other derivation that are part of the project will remain the intellec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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