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TMI Blog2022 (9) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal:- "(a) On the facts & circumstances of the case and in law, the ld. CIT (A) has erred in deleting the addition made buy the AO of Rs.2,06,29,647/- by disallowing payment made for management services u/s 40(a)(i) ignoring the fact that as soon as advice/services received, such advice is available to the assessee company for making use of the same in the decision making process of management and financial decision etc., therefore, the technical knowledge expertise and knowhow was made available to the assessee and there is no continuity in treatment on expenses on management fees for A.Y. 2009-10, 2010-11, 2013-14 & 2014-15 on the payments made its group entity in UK. (b) On the facts & circumstances of the case and in law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted TDS:- Sl. No. Name of the entity. Amount in Rs. 1 ITS Testing Services, UK Limited, London, Geneva Branch. 73,17,294 2 Intertek International Limited, UK. 35,59,301 3 Intertek Testing Services (Singapore) Pte Ltd. 54,80,512 4 Intertek USA Inc 33,32,480 5 Intertek Testing Services, NA, Inc, USA. 9,40,060 4. The assessee vide letter dated 7th December, 2016 submitted as under:- * Certain entities within the Intertek group have specialized knowledge and/or capabilities in the field of executive, commercial, financial, marketing, information technology and administrative management systems and techniques. * Since Intertek group entities constantly require various support services like finance, IT etc. as mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance of Double Taxation ('DTAA') then in relation to the assessee to whom such agreement applies the provisions of such DTAA shall apply to the extent which are more beneficial to the assessee. Therefore, it was contended that the provisions of DTAA over-ride the provisions of the Act to the extent these DTAA are favourable to the assessee. 6. The assessee further contended that the definition of Fees for Technical Services ('FTS') under the India UK DTAA and fees for included services (FIS) in the India USA DTAA covers only technical and consultancy services and does not include managerial services. Accordingly management charges which are in respect of managerial services availed by the assessee paid by the assessee to the foreign entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of the Chennai Bench of the Tribunal in the case of Foster Wheeler France S.A. [176 TTJ 521]; Cochin Bench of the Tribunal in the case of US Technology Resources (P) Ltd. [61 SOT 19] and the decision of the Hon'ble AIR in the case of Shell India Markets (P) Ltd. [18 taxmann.com 46] held that the payment made towards managerial services falls under "Fees for Technical Services" and are liable for TDS. 8. On appeal the ld. CIT (Appeals) considering the detailed submissions of the assessee furnished in the course of appellate proceedings and after analyzing the tax treaties applicable to the countries for which the assessee made payments to its AEs. and taking note of the fact that for assessment year 2010-11 the ld. CIT (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and held that the payments made towards management services to non-resident AEs by the assessee are not FTS and not liable for deduction of TDS under section 195 of the Act holding as under:- 11. None of the above findings of the ld. CIT (Appeals) were rebutted with evidences. On perusal of the assessment order it is noticed that the Assessing Officer gives a finding that the agreements show that the companies provided highly technical services and can be rendered only by a person who has high degree of expertise. It was also the observation of the Assessing Officer that the expertise which is available to the respective companies is made available to the assessee company for using the same in its managerial decision making pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of management charges disallowed by the Assessing Officer under section 37 of the Act. 13. On perusal of the order of the ld. CIT (Appeals) it is noticed that in the course of appellate proceedings remand report was called for by the ld. CIT (Appeals) on the additional evidences furnished by the assessee to prove whether the expenses were in fact incurred by the assessee for the purpose of its business. 14. The ld. CIT (Appeals) considering the remand report and the submissions of the assessee and the additional evidences furnished by the assessee deleted the disallowance of management charges made under section 37(1) of the Act observing as under:- 15. On careful reading of the order of the ld. CIT (Appeals) we find that the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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