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TMI Blog2024 (7) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... cal services was not taxable. The assessee company has utilized the service of the company outside the India and payment also made outside India and company was not liable for deduction of tax under section 195 of the Act. Assessee is a resident in India and he has paid fee for technical services to the non-residents. Thus, except in two circumstances, firstly, where the fees paid in respect of services utilized in a business carried on by the assessee outside India or secondly fee is paid for the purpose of earning any income from any source outside India, in all other cases the assessee is liable to deduct tax on the amount of technical fee paid to non-residents. Keeping in view the fact that work order was issued outside country for making an income from a source outside the country. The amount paid are covered in exception provided in section 9(1)(vii)(b). Hence the assessee was not required to deduct tax at source - Decided in favour of assessee. - Dr. B.R.R. Kumar, Accountant Member And Sh. Sudhir Kumar, Judicial Member For the Appellant : Sh. Ved Jain, AR, Supriya Mehta, AR For the Respondent : Sh. Amaninder Singh, SR. DR ORDER PER SUDHIR KUMAR, JM: This appeal by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lobal Inc. for rendering software training services is completely illogical. The taxable event and, consequently, the occasion for TDS, arose when it made payment of royalty of Rs. 54,65,508/- to the Everest Global Inc. The submission of appellant has been considered. Appellant has relied on a plethora of judgments in support of its contention that payment to Everest Global Inc. is not chargeable to tax in India. However, it has only offered explanation for payment of Rs. 16,44,268/- and not given any explanation for the total payment of Rs. 54,65,508/- made to Everest Global Inc., It is incomprehensible how providing of services outside India can be construed as separate business when the business is carried on in India. In this connection, a reference may be made to the distinction between a 'source of receipt' and 'source of income made by the Hon'ble Delhi High Court in the case of Havells India Limited (21 taxmann.com 476). Even though the source of receipt may be outside India, the source of income was very much in India. The amount in question is admittedly 'royalty'; not 'fees for technical services'. Hence, In view of the foregoing discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the CIA(A) . Reliance has been placed on the following Judgment:- 1-The Dy commissioner of Income Tax company Circle-II (2) Chennai vs M/S Hofincons Infotech And industrial Services Pvt .Ltd 2-Aqua Omega services (p) Ltd vs Assistant Commissioner of Income Tax Co Circle (2) Chennai 3 Dy commissioner of Income Tax company Circle I(1) vs Ajapa Integrated Project Management consultants (P) Ltd. 4. Titan Industries Ltd vs Income tax officer International Taxation Ward 19(1) Bangalore 5. Director of Income Tax Delhi vs M/S Lufthansa cargo India 6. GVK industries Ltd Another Vs The Income Tax Officer Another 7. CIT vs Aktiengesellschaft Kuhnle Kopp Kausch 7. We have heard the rival submissions and perused the material available on record. 8. In the Judgement of Principal Commissioner of Income Tax-2 vs Motif India Infotech (P) Ltd the Hon ble Gujrat High court held that; In the case of G.E India Technology Center P. Limited vs. Commissioner of Income Tax Anr.. reported in [2010] 327 ITR 456 (SC), the ratio laid down by the Supreme Court was that we remittance of money to a non resident would not give rise to the requirement of deducting tax at source, unless such remittance contains wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such explanation inserted with retrospective effect provides that obligation to comply with sub-section [1] of Section 195 would extend to any person resident or non-resident... whether or not non-resident person has a residence or place of business or business connections in India or any other persons in any manner whatsoever in India. This expression which is added fo removal of doubt is clear from the plain language thereof, may have a bearing while ascertaining whether certain payment made to a non-resident was taxable under the Act or not. However, once the conclusion is arrived that such payment did not entail tax liability of the payee under the Act, a held by the Supreme Court in the case of GE India Technology Center P. Limited [Supra), sub section [1] of Section 195 of the Act would not apply. The fundamental principle of deducting tax source in connection with payment only, where the sum is chargeable to tax under the Act, continues to hold the field. In the present case, the Revenue has not seven seriously contended the payment to foreign commission agent was not taxable in India. In this context, we would refer to Section 9 [1] (vii) (b) of the Act. Sub-section [1] of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the revenue, however, relied on a decision of Delhi High Court in the case of Commissioner of Income tax vs. Havells India Limited, reported in (2013) 352 ITR 376 (Delhi). In such case, however, the Court was of the opinion that the payment made by the assessee to a US based company for certification facilitating export was not in relation to the source of income which was based in India. The facts were thus different. It was also argued that the Commissioner [Appeals] had relied on a decision in the case of Adani Enterprises [Supra] against which, the Revenue's appeal has been admitted by the High Court. It prima facie appears that the facts in case of Adani Enterprises were different. In the present case, we have primarily gone on the question of the nature of assessee's activities and the nature of services rendered by the parent based company, for which commission was paid. Keeping the question pending before the High Court in the case of Adani Enterprises untouched, we can still dispose of this appeal. In the result, Tax Appeal is dismissed. 9. Perusal of the order of the Ld CIT(A) reveals that the Everest global Inc do not have any permanent establishment in India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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