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TMI Blog2023 (3) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... TRC) to the effect that Oilstone UAE is a tax resident of UAE was also furnished before the assessing Officer during the course of proceedings under section 201 - we are of the considered view that the assessee was not under an Obligation to withhold taxes on such payments made to Oilstone UAE. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) so as to call for any interference. Appeal of the Department is dismissed. - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Milin Mehat, A.R. For the Revenue : Shri Umesh Sinha, Sr. D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-13, Ahmedabad, in proceeding u/s. 250 vide order dated 09/03/2020 passed for the assessment year 2018-19. 2. The Department has raised the following grounds of appeal: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has red in deleting the demand of Rs 2,28,23,683/- by cancelling 201(a)/(1A) of the income-tax Act and allowing the appeal of the assessee. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment is time-barred by 278 days. The learned DR at time of hearing informed us that the order of Ld. CIT(Appeals) was communicated on 20-04-2020 and accordingly, the appeal was falling within the period of Covid pandemic. We observe that in view of the nation-wide lockdown from 24th March 2020, the Apex Court in Cognizance for Extension of Limitation, In re[2021] 127 taxmann.com 72 (SC) , took suo motu cognizance of the situation arising out of the challenge faced by the country on account of COVID-19 Virus and resultant difficulties that could be faced by the litigants across the country. Consequently, it was directed vide order dated 23-3-2020 that the period of limitation in filing petitions/applications/suits/appeals/all other proceedings, irrespective of the period of limitation prescribed under the general or special laws, shall stand extended with effect from 15-3-2020 till further orders. The suo motu proceedings were, disposed of issuing the directions as to in computing the period of limitation for any suit, appeal, application or proceeding, the period from 15-3-2020 till 14-3-2021 shall stand excluded. Consequently, the balance period of limitation remaining as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia as per India-UAE DTAA. The assessee s submission was not found satisfactory by the TDS Officer and he held that the assessee is not justified in contending that the payment under consideration was FTS and not royalty because the agreement was about design of towers and the payments made by the assessee were in the nature of the royalty because the services were of project specification study and design preparation criteria, preparation of tower foundation designs, preparation of structural drawing of towers, preparation of tower test data documents and tower profiling charge and it was mentioned in the agreement itself that it was drawing of tower which falls under the copyright of the service provider. Accordingly, as per the TDS Officer, it was case of royalty and not of FTS. Accordingly, the TDS Officer held that the assessee had made payment to Oil stone UAE for various services as mentioned in the Explanation 2 of Section 9(l)(vi) of the Act and that the payment was in the nature of royalty and since the assessee had failed to deduct tax on such payment, it was in default and liable to provisions u/s. 201(1) 201(1A) of the Act. The TDS Officer accordingly raised a demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices, Ld. CIT(Appeals) held that since in this case the services were provided by OilStone, UAE to the assessee outside of India and also since the services were utilised for the purpose of the business of the assessee outside of India, the case of the assessee was covered by the exclusion clause provided in section 9(1)(vii)(b) of the Act and the payment was not chargeable to tax in India under domestic law as fee for technical services . Accordingly, Ld. CIT(Appeals) held that the AO is not justified in holding the assessee as an assessee default under section 201(1) and 201(1A) of the Act. 6. The Department is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) deleting the additions made by the TDS Officer. Before us, the DR primarily relied upon the observations made by the TDS Officer in the 201 order. The DR has reiterated that in the instant set of facts, the payments qualified as royalty payments and since the assessee company is based out of India, Ld. CIT(Appeals) erred in holding that in view of the exclusion clause in section 9 (1) (vii)(b) of the Act, the sum is not chargeable to tax in India and hence the assessee was not under an obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue for consideration is that whether in the absence of FTS clause in the India UAE Tax Treaty, whether the aforesaid services are subject to tax in India. It is a well-settled law that if there is no FTS clause in the tax treaty, then the payments can be subject to tax in India only if the overseas company which has rendered the services has a permanent establishment (PE) in India and then such services may be taxed under Article 7 of India UAE Tax Treaty as business income. In the case of ABB FZ-LLC v. ITO 75 taxmann.com 83 (Bangalore - Trib.) , the ITAT held that once DTAA does not recognize any income as FTS or royalty, then classification of said income has to be as per other provisions of DTAA. In the case of Paramina Earth Technologies Inc v. DCIT 116 taxmann.com 347 (Visakhapatnam - Trib.) , the ITAT held that there being no provision in DTAA between India and Philippines to tax Fees for Technical Services, payment made by assessee to avail technical service from its AE, would be taxed as per article 7 but, in absence to PE in India, same could not be taxed in India as business profits. In the case of DCIT v. TVS Electronics Ltd. 22 taxmann.com 215 (Chennai) , the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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