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TMI Blog2022 (9) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of CIT(A) by holding that the payment made to non- resident recipient not having any permanent establishment in India and also that the services provided are not in the nature of royalty and fee for technical services. Accordingly we direct the AO to delete the demand. The appeal of the assessee is allowed. - I.T.A. Nos. 188 & 189/Kol/2018 - - - Dated:- 5-9-2022 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Rajesh Kumar, Accountant Member For the Appellant Shri Saumitra Choudhury, Advocate For the Respondent Shri G.H. Sema, Addl. CIT ORDER Per Shri Rajesh Kumar, AM: These two appeals preferred by the assessee against the separate orders of the Commissioner of Income Tax(Appeals)-6, Kolkata [her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as per section 195(1) of the I.T.Act, the non-resident company i.e. M/s Web Structure Pte. Ltd., Singapore has to has residence and place of business in India but the said parties does not have P.E. in India, therefore, section 195 is not applicable, as such his finding is completely arbitrary, unjustified and illegal. 6. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, on or before the hearing of the appeal. 3. Facts in brief are that the assessee is company registered and incorporated in India and engaged in the business of construction and development of projects during the year. The assessee was engaged in construction and development project called Atmosphere in Kolkata du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the payment relating to supply of managerial consultancy and technical services under the Agreement between both the companies falls under the definition of FTS under Article 12(4)(a) of the Treaty. And therefore, the entire payment under the Treaty to M/s Web Structures Pte. Ltd. is in the nature of payment for royalty and fee for technical services. The AO observed that since there was no information available about M/s Web Structures Pte. Ltd. being beneficial owner of the payment and received by it under Article 12(2) and consequently domestic tax rates provided and the tax payable was computed as under: 4. In the appellate proceedings, the Ld. CIT(A) confirmed the order of the AO by holding that the payment made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apped on the assessee i.e liability for non-deduction of tax at source u/s 195 of the Act on payment made foreign recipient. 5. The Ld. D.R. on the other hand relied on the order of authorities below by submitting that the assessee has received services in lieu of royalty and fee for taxes paid to the foreign company which are covered under Article 12(4)(a) of Treaty and therefore the appeal of the assessee may be dismissed. 6. After hearing the rival parties and perusing the material on record and the decision of the Co-ordinate Bench we find that the issue in the instant appeal is similar to one as decided by the Co-ordinate Bench in the sister concern namely DCIT vs. M/s Forum Homes Pvt. Ltd. (supra) wherein the Co-ordinate Benches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cesses, 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 technology contained therein. 9. A reading of Article 12(4) of the tax treaty would make it clear that payment made to a resident of one of the contracting state can be regarded as FTS, if, in course of providing managerial/technical or consultancy services, technical knowledge, experience, skill, knowhow or processes is made available which enables the person acquiring such services to apply the technology contained therein. It further provides, if the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty for any other project or for addition to the subject project or for completion of the project by any other entity. Similar is the scope of work and terms and conditions in respect of Web Structures Pte Ltd, another non-resident entity. 11. Thus, from the nature of services provided by the non-resident entities and the terms and conditions under which it was provided, it is clear that whatever services were provided are project specific and cannot be used for any other project by the assessee. Further, while providing such services neither any technical knowledge, skill, etc is made available to the assessee for utilizing them in future, independently nor any developed drawing or design have been provided to the assessee which can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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