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TMI Blog2023 (3) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion cannot be charged to tax. As reasonably concluded that payments remitted by the assessee to its parent company do not attract the provisions of sec 5 and sec 9. Even if it is assumed for the time being that assessee s remittances falls in sec. 9 still revenue is not able to establish the basic condition of sec 195 i.e. income element. In view of this payments made by assessee without TDS will not attract disallowance u/s. 40(a) (ib) r.w.s.195 and 9. Appeal filed by the assessee is allowed. - ITA No. 4407/Mum/2019 - - - Dated:- 13-1-2023 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER For the Appellant : Sh. Dharan Gandhi, Adv. For the Respondent : Sh. Soumendu Kumar Dash, Sr. DR ORDER PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of Commissioner of Income Tax (Appeals)-20, Mumbai (for short CIT(A) ) dated 27.03.2021 under section 143(3) of the Income Tax Act, 1961 (for short the Act ) for A.Y. 2013-14. The assessee has raised the following grounds of appeal: Being aggrieved by the order of the Learned Commissioner of Income-tax Appeals 20, Mumbai, ('Ld. CIT(A)') th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions wherein it has been confirmed that payment under consideration is reimbursement of actual expenses and allocated expenses to parent company. We further rely on para 5.3.6 vides page no. 7 of the Ld. CIT (A) order reproduced herein below: 5.3.6 In the assessment order, the AO has observed from the invoices raised by ITP Holdings Inc., Dubai that the services were provided by ITP BVI to the appellant can be broadly divided into (a) Accounts, (b) Management accounting, (c) Human resource services, (d) information technology services (e) Production services (design) (f) Production services (co-ordination). The AO held that those services provided by ITP BVI were in the nature of managerial, technical and consultancy services. The contention of the AO in this regard for each of the above categories of services, are tabulated below: Category of service Contention of the AO These services include (i) preparation of pay roll, bonus statements, paperwork relating to Freelancers and temporary staff etc. entering invoices, petty cash items, preparation of cheques for vendors (iii) pursuing debtors for collection, ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Production services (design). These services include creating page layout for ITP India Magazine supplements and for events related designs. Creating the page layout for the magazine require knowledge of specialised software on which such designs are made at therefore they are technical service. Production services (coordination) these services include all tasks right from sourcing bookings from clients to ensuring that the magazine is delivered on time These service amount to management of the business of the appellant and therefore they are managerial in nature 5.3.7 The AO has also observed in 11.3 of the ass 15CA dated 20.12.2012, the services were classified para 11.4 of the assessment order, without prejudice to her findings above, the AO has also noted that appellant had itself submitted such services through experts (employees/freelancers for technical services as per section 9 also includes technical and other personnel. Therefore, the appellant's contention, the payments to ITP BVI par fees. 5. In addition to above we have gone through articles - 5,6 and 7 of general and adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are further detailed in Appendix 1. 6.4 The Estimated Cost Shares shall be determined at the beginning of each Fiscal Year and the Final Costs Shares no later than mid-November of each Fiscal nagmm. otherwise agreed upon. Article 7-DETERMINATION OF ESTIMATED CHARGEABLE COSTS 7.1 At the beginning of each Fiscal Year, a budget consolidating all Estimated Chargeable Costs as well as the Estimated Costs Shares shall be elaborated. 7.2 Each Party hereto undertakes to provide in a timely manner all the Information and any supporting documentation required to enable the determination of total amount for the Estimated Chargeable Costs as well as its allocation among RECIPIENT. 7.3 Unless otherwise agreed upon, in determining the Estimated Costs and Estimated Costs Shares, any expenses or revenues Incurred In currencies other than US Dollar shall be translated into US Dollars at the exchange rate provided for in the budget set forth under article 7.1 above. 6. The summary of recitals of agreement between assessee and its parent company as tabulated by the AO and Ld. CIT (A) confirms that these are the only services provided by their parent company.This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and exclusive to the seeker of the service, the latter, even if termed as a service, is available to all and would, therefore, stand out in distinction to the former. 9. Thus, it can be noticed that the payment made to the assessee in question is not a consideration for managerial or technical or consultancy services and that being the position, it cannot fall within the ambit of section 9(1)(vii). Section 4 provides that the income tax shall be charged on the total income of any assessee of the previous year for any assessment year at the rates in accordance with and subject to the provisions of this Act. Scope of total income of any person has been enshrined in section 5. The assessee in question is a non-resident company. Section 5(2) mandates that the total income of a non-resident includes the income from whatever source derived which is received or is deemed to be received in India; or accrues or arises or is deemed to accrue or arise in India. The only possibility of the receipt by the assessee in the present facts and circumstances qualifying for inclusion in the total income, can be under section 9. It has been observed that section 9(1)(vii) is not applicable. Now i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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