9911796707
TMI Blog2022 (10) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 for non-charging of Equalization levy when the conditions prescribed as per the provisions of section 165 were fulfilled. 3. The brief fact as culled out from the records is that assessee is a proprietor of Oan Media and Web Solutions filed his return in ITR-3 declaring total income of Rs. 43,86,210/- on 31.10.2018. The case was selected for complete scrutiny under CASS for " Foreign remittance" and notice u/s. 143(2) was issued on 22.09.2019. The assessee is engaged in the business of providing support services of online advertisement, digital marketing and web designing and receives consultancy charges for such services rendered. 4. On examination of profit & loss account for the year under consideration it was noticed by the assessing officer, that the assessee has debited a sum of Rs. 8,89,35,558/- being online advertisement (adwords) charges paid to M/s. Google Asia Pacific Pte. Ltd., Singapore [ here in after referred to as Google, Singapore ], a non-resident having no permanent enterprise(PE) in India. Since the payment has been made to a non-resident by the assessee for advertisement purposes in the digital mode on behalf of his clients and that no tax was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent of Google Singapore whereby the assessee is granted access for the purpose of advertisement to be made on Google. On approaching the assessee, such person gets login credentials, generated by the assessee on the website of google through such credentials such person on its own runs advertisement on google. Such person on its own decides where the advertisement is to be run i.e. on which geographical location, who would be the target audience, for how much duration such advertisement is to be done. All such aspects are decided by the person running the advertisement and not by the assessee. Assessee is merely a means of getting the advertisement run on Google. The aspects as highlighted above w.r.t. the advertisements are not at all decided by the assessee. Thus, in substance assessee is only acting as a conduit for channelizing the funds from the person wanting to advertise to the platform on which such advertisement is to be done i.e. Google. Screenshots w.r.t. the user 10 created for the clients to provide the client access on the website of google through the assessee was submitted. Based on these the client of the assessee is given complete control of the various aspects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract between Google Singapore and the assessee who is stated as a customer and not an agent for the purpose of utilising Google's Program for placing digital advertisements on his behalf or on behalf of a third party. As per the Terms & Conditions of the agreement, as per point No.1 of the terms and conditions, the customer (assessee) authorises Google or its affiliates to place customer's advertising materials and related technology on any content or property provided by Google or its affiliates on behalf of itself or as applicable, a third party. 8A. As can be noticed on perusal of the above terms and conditions of the agreement entered into by the assessee and Google Singapore, the agreement is between a Service provider (Google) and its customer (assessee). Nowhere in the agreement is it mentioned that the assessee has been nominated and will act as an agent of Google Singapore. 8B. Further, the terms and conditions mentioned in Point No. 12 Miscellaneous (i) is reproduced here for reference: These Terms do not create any agency, partnership or joint venture among the parties." 8C. Further, it is noticed that the invoices are raised by the assessee on his clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of online advertising campaign on the google platform. This clearly establishes the nature services being provided by assessee his customers for effective running of online advertisement campaign behalf of clients which he compensated with consultancy fees. 8E. summary, the contention that he only acting as conduit/agent for channelizing funds from Advertiser (customers of assessee) to Publisher (Google Singapore) not acceptable and backed by factual evidence whatsoever. Contention No.2 Equalisation levy is not applicable if services are provided to persons outside India and the target customers of the advertisements are also outside India On perusal of submissions indicated para 3.2 above, it noticed that the assessee has contended that the payment Rs.8.89 crores to Google Singapore for utilising their services connection with running of online advertisement campaign on behalf of his clients does not attract equalisation levy the assessee's customers from whom revenue is received by him for running the online advertisement campaign and the persons for whom the advertisements are targeted are located outside India. other words, it reiterated by the assessee that if tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to address the challenges in terms of taxation of such digital transactions as mentioned above. In order to address these challenges, it is proposed to insert a new Chapter titled "Equalisation Levy" in the Finance Bill, to provide for an equalisation levy of 6% of the amount of consideration for specified services received or receivable by a non resident not having permanent establishment (PE) in India, from a resident in India who carries out business or profession, or from a non-resident having permanent establishment in India." * "Further, in order to reduce burden of small players in the digital domain, it is also provided that no such levy shall be made if the aggregate amount of consideration for specified services received or receivable by a non-resident from a person resident in India or from a non-resident having a permanent establishment in India does not exceed one lakh rupees in any previous year." * "To provide certainty and to avoid interpretational issues, it is also proposed to define certain terms and expressions used therein. Further it also proposes to provide for the procedure to be adopted for collection and recovery of equalisation levy. * "In order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of carrying out business or profession. 10. Sec.40(a)(ib) of the Income Tax Act The provisions of Sec.40(a)(ib) of the Act provide that "any consideration paid or payable to non-resident for a specified service on which equalisation levy is deductible under the er vill of the provisions of Chapter VIII of the Finance Act 2016 and such levy has not been deducted or after deduction, has not been paid on or before the due date specified in sub section (1) of Sec.139 of the Act, then 100% of expenditure requires to be disallowed on which tax has of the expenditure require not been deducted or after deduction has not been remitted. 10A. On perusal of the legislative intent behind the Equalisation Levy it is seen that it has been brought in to plug the revenue loss on account of digital transactions being carried outside the national boundaries bereft of a physical location as it is carried out in cyberspace. In order to bring these digital transactions within the tax ambit Equalisation Levy of 6% of the amount of consideration for specified services received or receivable by a non resident not having permanent establishment (PE) in India, from a resident in India who carries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consideration paid to a non-resident for specified services by a resident in India carrying on business or profession is liable for equalisation levy provided that the transactions do not fall within the exceptions mentioned in Sec.165(2) of the Finance Act 2016. So, the attempt by the assessee to carve out an exception which is not already provided in the statute and bring out an ambiguity is to hide his failure to deduct the equalisation levy on the payment to Google Singapore for the specified services rendered to the assessee for running an online advertisement campaign on behalf of his clients. 10E. In view of the detailed discussion above, the contention of the assessee that the consideration paid to Google Singapore is not amenable to equalisation levy is rejected. 11. Conclusion It is noticed from the factual matrix present in this case that the payment has been made to a Non Resident (Google Singapore) by the assessee for advertisement purposes in the digital mode on behalf of his clients and that no tax was deducted as equalisation levy on the payment made to the non-resident. The above transaction carried out by the assessee clearly attract the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n levy when the conditions prescribed u/s. 165 of the Finance Act, 2016 are fulfilled. Before we proceed on the issue it is better to understand the findings of the ld. PCIT, the same is reiterated herein below:- "7.1 Ground of Appeal No. 1- Disallowance u/s 40(a)(ib) Rs.8,89,35,558/-. a) The gist of disallowance made by the AO is outlined in paras 2(a) to 2(f) of this order. b) The undersigned has gone through the assessment order, written submissions filed by Appellant and contentions of Ld.AR of Appellant presented through Video conferencing. This Ground of appeal is discussed and decided in subsequent paras of this order. 7.2 Equalisation levy a) Law in respect of Equalisation levy was introduced pursuant to Base Erosion and Profit Shifting -Action Plan-1(BEPS Action Plan 1) on Digital Taxation. b) It was noted that lots of were remitted outside India on account of online advertisement. Indian Govt. was not able to recover the taxes on such online ads as no tax was deducted at source while remitting funds outside India for such online ads as the Ad Platforms like Google, Yahoo etc was not having any PE in India and all transactions were online. c) The Indian resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability arises for Equalisation levy @ 6% on the amount of consideration received or receivable. 7.3 The next issue to be decided in whether Equalisation levy is applicable in the case of Appellant or not on the transaction of Rs.8,89,35,558/- with Google, Singapore a) The gist of addition/disallowance made by the AO is outlined in paras 2(b) to 2(f) of this order. App The 40 concluded that payment of Rs.8,89,35,558/- made by Appellant to a Non Resident (Google Singapore) for ad purpose in digital mode on behalf of this clients clearly attract the provisions of Section 165(1) of the Act as the conditions specified therein are clearly satisfied by facts present in this case. AO further held that Appellant's case does not fall in the Exception clause provided u/s 165(2) of the Act. Thus, Equalisation Levy was held to be attracted on this payment made by Appellant to Google Singapore. As a result, the AO made disallowance u/s 40(a)(ib) of the Act to tune of Rs.8,89,35,558/-. b) The undersigned has discussed all the aspects of Equalisation Levy as per Section 165 of the Act in para 7.2 of this order. The conditions prescribed in cases where equalisation levy is not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lish that amount was received by Appellant for purpose of online ad on behalf of clients located outside India. Some samples of campaign reports obtained from Google Singapore in respect of such online ads of such clients. These campaign reports give Targeted locations, campaign details, number of clicks, Impr. etc. It shows that Target location/Target audience for all such online ads was located outside India. e) How online ads are run by Google on behalf of Clients of Appellant. Appellant claims to be an agent of Google Singapore and has been granted access for purpose of online ads to be run on Google. If any client wants online ad on Google, then the client had option of getting online ad on Google through Appellant. Client was given login credentials (generated by Appellant) on website of Google. Through those login credentials the client on its own could run the online ad on Google. Client decides the geographical location where the online ad will be run, who would be the target audience and for how much time the online ad will run. These aspects are not decided by Appellant. Appellant is only a mean of getting online ad run on Google. Appellant's role was l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of clients is located outside India and their target audience/customers for online ads are located outside India. Thus, these clients have no connection to India in respect of business carried out or services rendered. The invoice was not raised directly by Google Singapore to client of Appellant. It was channelized through the Appellant as Appellant is premier partner of Google Singapore. Benefit of being premier partner of Google was that entire online ads were run through the user ID allocated to Appellant but the ultimate decision on running the online ads was with the client of Appellant. Role of Appellant was of effectuating the online ads, whereas, the entire decision as to what ad was to be run, how much amount to be spent on each ad campaign, who are the target audience, what is the target location were decided by the client of Appellant. Role of Appellant was that of coordinator/agent between Google Singapore and a number of clients as Google Singapore need not deal with each client separately. 7.4 In view of the detailed facts outlined in paras 7.2 and 7.3 of this order let us now decide which the essential ingredient for applicability of Equalisation Levy are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the revenue submitted that the assessee is engaged in the business of online advertiser and his activity consist of digital marketing and web designing. Since, the assessee has paid to Google Singapore he is subjected to equalization levy and the disallowance made by the AO u/s. 40(a)(ib) is correct. He explained the explanatory notes to the provisions of the Finance Act, 2016 from the board circular no. 3/2017 vide para 32. He further explained the bare provisions of section 164, 165 & 166 Finance Act, 2016 by which the equalization levy brought into the statute in India. He explained that Organization for Economic Cooperation and Development (OECD) under action plan one of Base Erosion and profit shifting (BEPS) project has suggested several options to tackle the direct tax challenges. The options inter alia include option to impose a final withholding tax on certain payments for digital goods or services provided by a foreign e-commerce provide. The committee on taxation of e-commerce formed by the CBDT, after deliberating on all the options provided by OECD recommended equalization levy in the form of final withholding tax option for taxation of digital transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rs. 1.49 cr wherein also the nature of services are same and if that amount included then the same is matching with the figure of the remittance paid to Google Singapore. 9. Per contra, the ld. AR of the assessee has relied upon the written submission filed by him. The same is extracted here in below ; DPT. GROUND NO. 1: DISALLOWANCE OF RS. 8,89,35,558 U/S 40(a)(ib) 1. BRIEF FACTS 1.1. Assessee, an individual, for the relevant previous year, was in the business of providing support services of Online Advertisement, Digital Marketing and Web Designing, through his proprietorship concern, M/s Oan Media and Web Solutions. 1.2. During the course of his business, assessee received payment for running Online Advertisement Campaign, from his clients. Such amount was collected and, thereafter, paid to online advertising platform, i.e. Google Singapore, by the assessee for and on behalf of his clients.Assessee wasa premier partner of Google Singapore. 1.3. For the services rendered to his clients, assessee received certain amount as his consultancy charges. However, along with the consultancy charges, clients also paid assessee lumpsum amount for carrying out online advertisem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, for the purpose of online advertisement, on behalf of the clients, from outside India only. 2.2.iii. CAMPAIGN REPORT OBTAINED FROM GOOGLE SINGAPORE, on sample basis, establishing the fact that the target audience of such advertisements were outside India. 2.3. MODUS OPERANDI of how the online advertisement was run by the assessee on Google, for and on behalf of his clients, was also explained before the lower authorities, which is again summarized hereunder[PB: 35-61]:- 2.3.i. Assessee was an agent of Google Singapore, whereby, the assessee was granted access for the purpose of advertisement to be run on Google; 2.3.ii. If any person/entity wanted to do advertisement through Google, then such person had an option of getting the advertisement on Google through the assessee; 2.3.iii. On approaching the assessee, such client got login credentials, generated by the assessee on the website of Google through such credentials such client on its own could run the advertisement on Google; 2.3.iv. Such person on its own decided where the advertisement was to be run, i.e. on which geographical location, who would be the target audience, for how much duration such advertisemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y responsible for making the campaign to be run, rest everything was done by the client of the assessee, including how much amount is to be appropriated to which campaign and also the target audience for each and every campaign. 3. SUBMISSION ON LEGAL ASPECTS 3.1. Before the lower authorities,following contentions were raised by the assessee for submitting that for such online advertisement, no equalization levy was to be paid by the assessee, in accordance with Section 165 of the Finance Act, 2016:- 3.1.i. Assessee only acted as a conduit for receiving the payment from his clients from outside India and thereafter making the payment to Google Singapore for and on behalf of his clients. Assessee only acted as an agent of Google Singapore and the ultimate beneficiary of such advertisements were assessee's clients who were outside India and not the assessee; 3.1.ii. Since the clients for the benefit of whose business advertisements were run on Google were outside India and the target audience of such advertisement were also stationed outside India, there cannot be any liability of Equalization Levy on such transactions by the Indian tax Authorities. 3.2. Attention is drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omething, such act or abstinence or promise is called a consideration for the promise; * In the present case, the client of the assessee, being outside India, wanting to get its advertisement done on Google is the "promisor" and Google Singapore is the "promisee". * The contract, in substance, is made between the client of the assessee outside India and Google Singapore. If the payment is not made by the client of the assessee outside India then there would not be any requirement for the Google Singapore to run any advertisement. * Assessee and the entire scenario only acted as a conduit. 3.4.ii. Consideration should be received/receivable by the Non-Resident from Resident and such Resident should be carrying on business India. * Thus, if the services are being received by a person resident in India, then it should be received for the purpose of carrying out his business or profession in India. * However, in the present case, the ultimate recipient of the services of Google Singapore is not the assessee but his clients who were located outside India. * Assessee, it is reiterated, was simply a conduitchannelizing the funds for his customers received from outside India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness run in India, that can be recovered by the Indian Tax Authorities at the threshold level itself. This was in line with the recommendations of the BEPS ACTION PLAN 1. 3.6.vii. The primary requirement for such taxability is that the business for which the online advertisement is being run should be in India or the target audience of such advertisement should be in India. However, in the present case neither of the two elements are based in India. Assessee, in the present case, only acted as a means to effectuate the online advertisements and acted as a conduit. 3.7. Finance Minister, in his speech, while introducing the Finance Bill, 2016, for the purpose of law on Equalization Levy stated as follows:- "...151. In order to tap tax on income accruing to foreign ecommerce companies from India it is proposed that a person making payment to a non-resident, who does not have a permanent establishment, exceeding in aggregate Rs. 1 lakh in a year, as consideration for online advertisement, with withhold tax at 6% of gross amount paid, as EL. The levy will only apply to B2B transactions..." 3.8. Relevant extract of the memorandum explaining the provisions of the Finance Bill, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blishment by the assessee before the ld. AO and is also an undisputed fact that the clients for whom the assessee acted were all located outside India and they did not have any connection, of whatsoever nature, for business in India. Neither they carried out business in India nor did their target audience were based in India. 3.13. Reference is also drawn to Section 165A, introduced in Finance Act, 2016, vide amendment brought about through Finance Act, 2020. In such section it has been clearly specified that the services shall be taxable in India, only if they are provided or facilitated to a person resident in India or to a person who buys such goods or services or both using Internet Protocol Address located in India. Thus, the intention of the statute is to bring within the purview of Equalization Levy, only those transactions which have some connection with India. The connection should be in relation to the business carried out in India or services rendered in India. However, in the present case, it is reiterated, that the business of the clients on whose behalf the assessee acted upon were all located outside India and also the target customers/audience for the advertisemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scenario the business, in effect, would have been not carried out in India. Accordingly, the Indian Government would not have the jurisdiction to tax such transactions in India. As has been explained hereinabove, assessee only acted as a conduit between his client and Google Singapore. His client carried business outside India, the target audience, for whom such advertisement was run, were also located outside India, the advertiser ultimately running the advertisement was also located outside India. The Indian jurisdiction was only used for channelizing the funds. Nothing on account of such business was carried out from India. Under such circumstances, there cannot be any applicability of Equalization Levy. 3.17.ii. Situation II: On the contrary, if the answer to the above question is in positive, i.e. if any advertisement had been carried out for any business which had earned income from India or which had been carried out in India then there would have been applicability of Equalization Levy. In such a scenario, even if the funds had been channelized through any other country, then also there would have been applicability of Equalization Levy for the entity for whose business t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. Ld. AO disregarded the arrangement for the reason that the agreement nowhere mentioned that assessee was agent of Google Singapore. Also that the invoice was raised by assessee to his client and also by Google Singapore to assessee. 4.1.iii. The invoices were not raised by Google Singapore to the client of the assessee directly but it was channelized through the assessee. This is for the reason that assessee was the Premier Partner for Google Singapore. Also, applicability of Equalization Levy is not based on the person raising the invoice, but the ultimate beneficiary of such advertisement and where such ultimate beneficiary is located. 4.1.iv. Entire online advertisements were run through the User ID allocated to the assessee, being the Premier Partner, however, ultimately the advertisements were run by the client of the assessee. 4.1.v. Ld. AO disregarded that the entire amount was channelized from outside India into the bank account of assessee in India and thereafter the entire such amount was paid as online advertisement to Google Singapore. 4.1.vi. The modus operandi adopted for the advertisement was such that assessee only helped in effectuating the online adver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court allowed the claim of the assessee and held that "....We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although, under the law, a deduction must be allowed by the Income-tax Officer, the assessee will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter...."Hon'ble Delhi High Court in the case of TriveniEngg. & Industries Ltd. (2009) 181 Taxman 5 (Delhi) support the above contentions. 5. ORDER PASSED BY LD. CIT(A) - DELETING THE DISALLOWANCE 5.1. Ld. CIT(A) considered the entire factual and legal position as set out hereinbefore, during the course of appellate proceedings. 5.2. Ld. CIT(A) accepted the contention of the assessee and deleted the entire disallowance made by the ld. AO. 5.3. Ld. CIT(A) at Page 26 of the order held as under:- 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken a approaches that the expenditure that the assessee is claiming and paid to Google Singapore neither accrued or arise in India nor the digital target audience is in India. It is not disputed by the revenue that the income that the assessee has received is for the following foreign entity: a) Harmony Commerce Co. Ltd. Hong Kong. b) Hongkong Bule Seawhale Technology co. Ltd. Hong Kong. c) Shenzhen Scolour Technology co. Ltd. Hong Kong. d) Shenzhen Tonsee Electronics Co. Ltd. Hong Kong Copy of Foreign Inward remittance certificate (FIRC) has been placed on record and thus the fact that the assessee has received the income from the foreign client is not disputed. Further the assessee placed on record a consolidated report as downloaded from the website of Google, for the campaign run by the assessee for his clients outside India. Such report is placed on record to establish that the target customers for the advertisement's campaigns were located outside India. All these facts were not disputed by the ld. AO. The assessee just creates a login Id with the money in the wallet and there after it is the client who decide about the place and area where the advertisement campai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a person making payment to non-resident, who does not have permanent establishment, exceeding in aggregate Rs. 1 lakh in a year, as consideration for online advertisement, will withhold tax at 6 % of gross amount paid, as Equalization levy. The levy will only apply to B2B transactions. In the present set of facts no income accruing to foreign e-commerce companies from India as it is established from the set of evidence placed on record that the advertiser and target audience and the service provider all are outside India and the expenditure the assessee has incurred has not relation to any Indian operations and thus, the income is not accruing to India and therefore, the view of the AO merely the same is paid and subjected to EL without verifying the facts and circumstances is bad in law. Even, as per section 165 of the Finance Act, Equalization Levy [hereinafter "EL"] is applicable where non-resident e-commerce operators supply to (a) person resident in India (b) Person using an Indian IP address (c) Non-resident in specific cases. Examples of specific cases where supply to a non-resident is subject to equalization levy are (a) sale of advertisement to non-resident and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to Sir Frederick Pollock. Consideration is the price for which the promise of the other is bought, and the promise thus given for value is enforceable." An agreement without consideration is a bare promise and exnudo pacto non aritio actio, i.e., cannot be held to binding on the parties. Based on the above definition the consideration that the assessee is paying not a valid contract flow between the Google Singapore and the assessee, it is the customer outside India and Google Singapore the assessee has mere acted as agent and consideration and contract flows both with the persons having no PE or presence in India and their advertisement target is also not having the territory of India, so the dual condition prescribed under the section 165 is not established and therefore, based on these set of transaction the provision is not applicable. Thus, the EL can be levied only if the India Government has valid jurisdiction to levy the tax based on the PE, SEP [ significance presence ] or target audience none of the criteria is fulfilled to tax the payment that the assessee has made. The ld. AR of the assessee to support this argument has relied upon the provision of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia or by permanent establishment in India of a person non-resident in India, if provision of such services is effectively connected with such permanent establishment.] Thus, it is evident that here the specific definition make clears the intention and when the same is not expressly covered it must be seen from the other similar provisions of the Act and a harmonious reading of law should be made to correctly interpret the provision of law newly introduced. Mere conduit service payment where the income is neither accrue or arise in India and the clear definition given in section 165A of the Finance Act, 2016 the levy is not required to be paid by the assessee as correctly held by the ld. CIT(A) by giving a detailed finding in this case. The ld. AR of the support his arguments further relied upon the provision of section 9(1) Explanation I which is extracted here in below: Income deemed to accrue or arise in India. 9. (1) The following incomes shall be deemed to accrue or arise in India :- (i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of determining the tax liability is an internationally accepted principle. An endeavour should, thus, be made to construe the taxability of a non-resident in respect of income derived by it. Having regard to the internationally accepted principle and DTAA, it may not be possible to give an extended meaning to the words 'income deemed to accrue or arise in India' as expressed in section 9 of the Act. Section 9 incorporated various heads of income on which tax is sought to be levied by the Republic of India. Whatever is payable by a resident to a non-resident by way of fees for technical services, thus, would not always come within the purview of section 9(1)(vii) of the Act. It must have sufficient territorial nexus with India so as to furnish a basis for imposition of tax. Whereas a resident would come within the purview of section 9(1)(vii) of the Act, a non-resident would not, as services of a non-resident to a resident utilize in India may not have much relevance in determining whether the income of the non-resident accrues or arises in India. It must have a direct live link between the services rendered in India, when such a link is established. the same may aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -attraction of equalization levy. It can be seen from the notes to the Finance Act 2016 it is clearly mentioned that to avoid interpretational issues and to provide certainty, definitions to the terms and expressions used in the provisions relating to Equalization Levy have been provided. The definitions provided therein clearly indicate that the consideration paid to a non-resident for specified services by a resident in India carrying on business or profession is liable for equalization levy provided that the transactions do not fall within the exceptions mentioned in Sec. 165(2) of the Finance Act 2016. So, the attempt by the assessee to carve out an exception which is not already provided in the statute and bring out an ambiguity is to hide his failure to deduct the equalization levy on the payment to Google Singapore for the specified services rendered to the assessee for running an online advertisement campaign on behalf of his clients. In view of that contention of the assessee that the consideration paid to Google Singapore is not amenable to equalization levy was rejected by the AO stating that as it is noticed from the factual matrix present in this case that the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be done i.e. Google. We have gone through the submission in detailed placed on record by the assessee in the form of Screenshots w.r.t. the user 10 created for the clients to provide the client access on the website of google, the contention of the assessee that all these clients are of the non jurisdiction to India not only that the targeted customers or the area has no business or ultimate relation any business in India. This very basic facts were not disputed by the revenue. The only dispute that the revenue carries in this appeal that whether the online advertisement which are of non-jurisdictional area for which the assessee has claimed the expense are subjected to EL or not? To relates the client as well as cluster or area of the ultimate advertisement both are undisputedly out of India but since the assessee has made the payment outside India and claimed as expenses the ld. AO is of the view that the assessee is subjected to EL and since the levy is not collected it attract disallowance u/s. 40(a)(ib) of the Act at 100 % of the payment made. 13. The ld. AR of the assessee has shown on the issue that targeted audience, the person who runs advertisement and party who as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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