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TMI Blog2024 (3) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... marketing support service also does not satisfy the make available conditions and hence, is not taxable. Accordingly, we allow ground of assessee and delete the addition. Levying interest u/s 234A - assessee submitted that as per the notification No.93/2020/F. No.370142/35/2020-TPL, dated 31/12/2020, the due date for furnishing income tax return for the impugned AY 2020-21 was extended to February, 15, 2021, therefore, the AO erred in levying interest u/s 234A for the A.Y.2020-21 as the assessee has filed the return of income on February, 2021, which is well within the extended due date - HELD THAT:- We remand the issue to the file of the AO with a direction to verify the extended due date for filing the return and the actual date of return filed by the Assessee and pass appropriate order in accordance with law. According, the ground No.5.1 of the assessee is partly allowed for statistical purposes. Levying of interest u/s 234B - Considering the submission made by the AR, we deem it fit to remand the issue of levying interest u/s 234B of the Act to the file of the AO to verify and re-compute the assessed income and the tax thereon in accordance with law. Accordingly, ground No.5.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the Appellant. Such directions are in violation of the powers provided under section 144C of the Act and therefore such directions and the final assessment order passed in consequence of such directions are incorrect, invalid and liable to be quashed. III. Non taxability of sub-contracting charges 3.1. On the facts and circumstances of the case and in law, the lower authorities erred in concluding that the services rendered by the Appellant are in the nature of automated digital services and software services. 3.2. The lower authorities have erroneously formed an opinion on the taxability of sub-contracting charges received by misapplying the provisions of the Act and India-USA DTAA, without considering the information, arguments and evidence provided by the Appellant. 3.3. The lower authorities erred in concluding that the sub-contracting charges paid by SPi India to the Appellant are chargeable to tax by treating the same as FIS under Article 12(4) of the India-USA DTAA, without appreciating that the condition of make available of technical knowledge is a prerequisite for determining whether an income falls under Article 12(4) of the India-USA DTAA. 3.4 The lower authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te specified under the provisions of the Act. 5.2 On the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under section 234B of the Ac 5.3 On the facts and circumstances of the case and in law, the Ld. AO erred in making an adjustment towards amount refunded while arriving at the demand payable, without appreciating that no refund was granted to the Appellant. The Appellant prays that directions be given to grant all such relief arising from the grounds of appeal mentioned supra and all consequential relief thereto. The grounds of appeal raised by the Appellant herein are without prejudice to each other. The Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal. 3. The brief facts of the case are that the assessee filed its return of income for Assessment Year 2020-21 on 12/02/2021 declaring total income of Rs. 11,98,86,220/- claiming the same as taxable at the rate of zero percent under income from other source, as per Article 12 of India-US DTAA. The case was selected for complete scrutiny under CASS due to claim of high rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the material. The very same issue involved in Ground No. 3.3 3.4 has been decided by the Coordinate Bench of the Tribunal in Assessee s own case for A.Y 2019-20 in ITA No. 1662/Del/2022 dated 07/07/2023, wherein it is held as under:- 7. We have heard the Ld. Representative of the parties and perused the material on record. It is an admitted fact that the assessee is a tax resident of US and hence can opt to be governed by the provisions of India- USA DTAA if more beneficial to it in terms of section 90(2) of the Act. 7.1 The perusal of records reveal that the assessee executed a document titled statement of work effective as at 1st January, 2018 with the assessee for the provision of services defined and at the prices agreed upon. This statement of work documents the contract deliverables to be provided by the assessee to SPi India (at page 38 and 39 of Paper Book). The overview of work as contained in the said statement of work is as under:- OVERVIEW OF WORK Vendor will provide the e-publishing services for titles specified by SPI Technologies India Private Limited (Formerly Lambda Content India Private Limited) using specialized software. This will include updating content, g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the service provider. The fact that the provision of the service may require technical/consultancy input by the person providing the service does not per se mean that technical knowledge, skills etc. are made available to the person availing the service. There has to be a transfer of the technical knowledge, experience, skill, know-how or processes or a technical plan or technical design from the service provider to the service recipient and the same should remain with the service recipient even after rendering of the services has come to an end. 7.5 The e-publishing work in the nature of editorial services comprising of page composition, language polishing, indexing, correcting faulty grammar and punctuation etc. sub-contracted to the assessee involves technical expertise, however, such expertise is not transferred by the assessee which can be independently applied by SPi India in future on its own without recourse to the assessee. 7.6 The impugned payment is not in relation to any services which make available any technical skill or know-how etc. to SPi India. In Outotec India P Ltd. Vs CIT (2015) 41 ITR (Trib) 449 (Delhi), Delhi Bench of the Tribunal pointed out that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct. 7.8 In the light of the above factual matrix and the judicial precedents cited above, we are of the view that the sub-contracting charges received by the assessee does not satisfy the make available condition as envisaged under Article 12(4) of the India-USA DTAA and hence are not chargeable to tax as FIS in India in the hands of the assessee. Accordingly, all the grounds of appeal are decided in favour of the assessee. By following the order of the Tribunal in Assessee s own case for A.Y.2019-20, we allow the ground No.3.3 and 3.4 and delete the addition made by the AO. 9. Grounds No.4.5 4.6 are against the action of the lower authorities in concluding that services were made available to the recipient, without appreciating the meaning of the term make available as defined in the Memorandum of Understanding to India-USA DTAA and various judicial precedents. Without prejudice to the above, the AR contended that the lower authorities erred in adjudicating sales commission along with sub-contracting charges and therefore erred in not giving a separate direction/finding in respect of sales commission. The Ld. Counsel for the assessee submitted that since main services of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation sheet and sought for remanding the matter to the file of A.O. for re-computing. Considering the submission made by the AR, we deem it fit to remand the issue of levying interest u/s 234B of the Act to the file of the AO to verify and re-compute the assessed income and the tax thereon in accordance with law. Accordingly, ground No.5.2 of the assessee is partly allowed for statistical purpose. 14 Ground No.5.3 is regarding non-consideration of refund due to the assessee. The Ld. Counsel for the assessee submitted that while arriving at the demand payable in the computation sheet, the AO erred in making an erroneous in adjustment towards amount refunded of Rs. 3,00,300/- without appreciating the fact that no refund was granted to the assessee and sought for remanding in the issue to the file of the AO. Considering the submission made by the AR, we remand the issue involved in ground No.5.3 to the file of the AO to consider the submission made by the assessee and pass appropriate order in accordance with law. 15. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in open Court on 13th March, 2024. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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