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TMI Blog2023 (9) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral training services under section 40(a)) of the Act 2.1 The CIT(A) erred in confirming the order of the Assessing Officer (A0) in disallowing expenditure on general training services amounting to Rs.92,24,879/- paid outside India under section 40(a)(i) of the Act. 2.2 The CIT(A) ought to have appreciated that the payment towards general training services to the non-resident (i.e. SCB, Singapore) is not taxable in India as it neither accrues nor deemed to accrue or arise in India as the services were rendered outside India and as such there is no obligation to deduct taxes under section 195 of the Act. 2.3 The CIT(A) ought to have appreciated that the non-resident does not have any Permanent Establishment (PE) in India and as such the income earned by the non-resident would not be taxable in India. 2.4 The CIT(A) erred in confirming the order of the AO in holding that the expenditure towards general training services is in the nature of Fees for Technical Services (FTS) without appreciating that training towards soft skills, leadership, general communication, teamwork, etc. cannot be termed as technical in nature. 2.5 The CIT(A) ought to have appreciated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckground, our adjudication would be as under. 2. The brief facts of the case are that the assessee is a private limited company incorporated in India under the Companies Act, 1956 and is a tax resident of India. It undertakes back office data processing, information technology support, Call Centre operations, software development, maintenance and support services in Chennai and Bangaluru, India for Standard Chartered Group's operations in India and overseas. Its income tax returns were subjected for scrutiny assessment. The Ld. AO made impugned disallowance for want of TDS on payment made by the assessee to its group entity, treating the same to be fees for technical services. Similar disallowance was made in AY 2014-15. The Ld. CIT, vide common impugned order, held that the payment made to Singapore entity would be fees for technical services and therefore, the disallowance was justified. Aggrieved, the assessee is in further appeal before us. 3. We find that similar issue stood decided in assessee's favor for AY 2014-15 vide ITA No. 2092/Chny/2017 order dated 18-11-2022 as under: - 6. It is admitted position that the services are availed by the assessee for its employees to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in recent decision titled as DCIT vs. Total Oil India Private Ltd. (ITA No. 6997/Mum/2019 order dated 20.04.2023). A copy of the same has been placed on record. However, Ld. AR still pressed this ground and justified admission of additional ground as under: - Jurisdiction to admit additional grounds of appeal: The Appellant submits that the said additional grounds are purely legal in nature and that the consideration of the said grounds by Your Honours does not require submission of further details/materials and all such material facts and details are already available or record before Your Honours. In support of the above contention, the Appellant relies on the Circular issued by the Central Board of Direct Taxes, instructing the officers of the Income Tax Department not to take advantage of the ignorance of an Assessee as to his rights, and directing the officers to guide the Assessee where the proceedings or particulars before them indicate a refund or relief due to such taxpayer. The relevant extracts of the circular are reproduced herein: "(3) Officers of the Department must not take advantage of ignorance of an Assessee as to his rights. It is one of their d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 5 to 8 have observed as under: "5. Under section 254 of the Income Tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If for example, as a result of judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raisin that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objection before the Tribunal. We fail to see why the Tribunal should be prevented f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a bearing on the tax liability of the assessee. We remand the proceedings to the Tribunal for consideration of the new ground raised the assessee on the merits. 4.4 In the case of Abhinitha Foundation Pvt. Ltd. (supra) the observations of the Hon'ble Madras High Court are as under : "17. A similar situation arose in the case of ACIT vs. Gurjargravures P. Ltd. In this case as well, it was noticed that neither was any claim made before the ITO nor was any supporting material placed on record. It is in this background that no relief was granted. The Supreme Court, in this case, disagreed with the High Court, inasmuch as it sustained he direction of the Tribunal issued to the ITO to grant appropriate relief qua claim made under section 84 of the Act. "18. In sum, what emerges from a perusal of the ratio of the judgments cited above, in particular, the judgments rendered by the Supreme Court in GOETZE's case and National Thermal Power Co. Ltd.'s case, and those, rendered by the Division Bench of this Court in Ramco Cements Ltd. and CIT vs. Malind Laboratories P. Ltd., as also the judgments of the Delhi High Court in Sam Global Securities Ltd.'s case and Jai Parabolic Spring's L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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