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TMI Blog2022 (3) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... our of assessee. - ITA No.1069/Chny/2019 - - - Dated:- 7-3-2022 - Hon ble Shri V. Durga Rao, Judicial Member And Hon ble Shri Manoj Kumar Aggarwal, Am For the Appellant : Shri Vikram Vijayaraghavan (Advocate) Ld. AR For the Respondent : Shri P. Sajit Kumar (JCIT) Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2010- 11arises out of the order of learned Commissioner of Income Tax (Appeals)-16, Chennai [CIT(A)] dated 20-02-2019 in the matter of order passed by Ld. Assessing Officer [AO] u/s. 201(1)/201(1A) of the Act on 31-03-2017. The grounds raised by the assessee read as under: 1. The order of Commissioner of Income tax (Appeals) is contrary to law, facts, and circumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in confirming the levy of interest under 201 (1)/201 (1A) of the Income Tax Act 1961. 3. The Commissioner of Income tax (Appeals) erred in confirming that expenditure for carrying out the warranty by the Distributors constitute 'fees for technical services' requiring tax deduction at source. 4. The Commissioner of Income tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical matters to the assessee 11. The Appellant submits that Without prejudice to the above, the Commissioner of Income tax (Appeals) ought to have appreciated that the cost of replacement of part is merely a sale of goods and is not taxable in India. Only that portion of the payment to non-resident which is considered taxable in India requires TDS. 2. Drawing our attention to the grounds of appeal, Ld. AR submitted that the issue is squarely covered in assessee s favor by the decision of this Tribunal in the case of similarly placed assessee M/s Nissan Motors India Pvt. Ltd. V/s DCIT (ITA No.1854/Mds/2017) dated 21- 03.2018. A copy of the order has been placed on record. The Ld. DR supported the orders of lower authorities. 3. Having heard rival submissions and after going through facts on record including the judicial pronouncements as relied upon during the course of hearing, our adjudication would be as under. Assessment Proceedings 4.1 The material facts are that the assessee being resident corporate assessee is stated to be engaged as manufacturer of agricultural tractors. It has exported tractors and appointed dealers to sell the tractors abroad. The trac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealers to the end-users and not to the assessee. The claim by the dealer was only in the nature of business expenditure incurred by the assessee in the course of their business of selling tractors. Another submission was that the services were rendered and utilized outside India and therefore, no tax would be required to be deducted as per various judicial pronouncements since the non-resident distributors did not have any permanent establishment (PE) in India. However. Ld. CIT(A) chose to confirm the stand of Ld. AO, inter-alia, by noticing that the contract of warranty was between the assessee and the customers and the contract for carrying out the warranty services was between the assessee and dealers. The services so rendered were fees for technical services and therefore, the assessee was obligated to deduct tax at source. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 6. Upon careful consideration of material fact, it could be gathered that the assessee is primarily engaged as manufacturer of agricultural tractors. It has sold tractors overseas through non-resident distributors. As part of the sales obligations, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provision of Section 9 of the Act is reproduced herein below for reference:- Section 9(1) : The following income shall be deemed to accrue or arise in India:- (i) ------------------ (ii) --- (iii) --- (iv) ---- (v) ---- (vi) ---- (vii) Income by way of fees for technical services payable by ------- (a) ----------------- (b) A person who is resident , except where the fees are payable in respect of services utilized in business or profession carried on by such person outside India orfor the purpose of making or earning any income from any source outside India ; or The above provision of Section 9(1)(vii) and the second limb of (b) of the Act, clearly provides that where a resident is liable to pay fees in respect of services utilized in a business or profession carried on by such person for the purpose of making or earning any income from any source outside India, the income arising from such payment shall be excluded from the deeming provision of Section 9(1) of the Act viz., income accruing or arising in India . In the case of the assessee, the assessee is a manufacturer of motor cars in India and exports the motor cars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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