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TMI Blog2024 (9) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of non deduction of TDS for the payment made for managerial services received by the assessee from Lloyds Register of Shipping has already been decided by the Tribunal for this year and earlier years in favour of the assessee, the only issue that has been raised by the assessee in these appeals pertains to non grant of TDS credit by the lower authorities. The assessee has also submitted that it had filed rectification application u/s. 154 of the Act before the ld. A.O. which is pending for disposal. In the present situation, we deem it fit to remand these issues back to the file of the ld. AO for verification and thereby direct the ld. A.O. to grant the TDS credit subject to verification and in accordance with law. The assessee is also directed to comply with the proceeding and to furnish all documents in support of its claim. - Ms. Kavitha Rajagopal, JM And Ms. Renu Jauhri, AM For the Assessee : Shri Nitesh Joshi, Ms. Vaibhavi Gandhi For the Revenue : Shri Anil Sant-Addl.CIT DR ORDER PER BENCH : ITA Nos. 1777 to 1781/Mum/2024 These appeals are filed by the Revenue challenging the order of the learned Commissioner of Income Tax (Appeals) ( ld.CIT(A) for short), National Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into a license agreement and management service agreement dated 16.07.2003 with its subsidiaries including LRA and LRQA, who are the licensee for which the assessee has declared receipt of license fee as taxable and management charges from LRA-IBO and LRQA-IBO as exempt . The details of management charges received by LRA-IBO and LRQA-IBO is furnished herein under: 1. LRA-IBO Rs. 2,96,58,908/- 2. LRQA-IBO Rs. 42,88,942/- Total Rs. 3,39,47,850/- 6. The ld. A.O. observed that the assessee has claimed the said charges as exempt and further that in A.Ys. 2005-06 to 2011-12 the same has been held as technical service which is chargeable to tax under Article 13(4)(a) of the India-UK DTAA. The ld. A.O. further held that the management services provided by LR are ancillary and subsidiary to the enjoyment of the intellectual property right as per the license agreement and the management service agreement is nothing but same as that of license agreement, which is for promoting safety on land, at sea and in air. The ld. A.O. stated that the management service agreement is interconnected with the license agreement where the same cannot be enjoyed independently without the existence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives are to promote safety on land, sea and air. The ld. DR further stated that the quantum of payments received as license fee and management charges are also the same which substantiates that both are for the enjoyment of IPR s rights and are having nexus with each other. The ld. DR further stated that the management charges are nothing but technical service provided by the assessee which are deem to accrue or arise in India, irrespective of the fact that whether there is a PE or not, the same is liable to be taxed in India. 11. The learned Authorised Representative (ld. AR for short), on the other hand, controverted the said fact and stated that the issue before us is already covered by the Tribunal s decision in the case of Lloyd s Register Asia (supra) wherein it was held that managerial services are not fees for technical services . The ld. AR further stated that the said proposition would also be applicable in the assessee s case also and relied on the order of the ld. CIT(A). The ld. AR also relied on the decision of the Hon ble Delhi Court in the case of Steria (India) Ltd. v. CIT [2016] 72 taxmann.com 1/241 Taxman 268/386 ITR 390 which held that the payment made for mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph 2 and 3 of the judgment and the Court's conclusion in paragraphs 19 to 24. Similar view has been taken by the Mumbai Bench of the Tribunal in Dy. CIT v. Hyva Holding B.V [2019] 106 taxmann.com 24 in that case, though the services were of a mixed nature, the Tribunal has characterised the services as managerial services based the predominant nature of the said services. 12. In the present case before us, the only reason given by the DRP to hold the payment under the Management Services agreement as fees for technical services is that the said services are ancillary and subsidiary to the enjoyment of the property for which the payment by way of royalty has been made. According to them, this test is fulfilled in the present ease because the objective of the License agreement and the Management service agreement is the same i.e. to promote safety on land and at sea and in the air. The assessee before us stated that if the services referred to in the Management Services Agreement is accepted as for managerial services, then, the said aspect would not arise in the absence of the services falling in the main part of the definition of fees for technical services as per article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax at source under section 195 of the Act where the obligation arises only when the sum is chargeable to tax under the Act. For ascertaining chargeability to tax reference to the relevant DTAA is essential. This point of distinction has been accepted by the Hon'ble Apex Court in Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT [2021] 125 taxmann.com 42/281 Taxman 19/432 ITR 471 thereof while dealing with the obligation to deduct tax at source on software related payments. Hence, in the given facts and circumstances we hold that the assessee's services were managerial in nature and not technical services. Hence, the assessee is not liable to deduct TDS on the same. The disallowance proposed by DRP and made by AO is deleted. This issue of assessee's appeal is allowed. 12. From the above, it is observed that the issue in hand has already been dealt with by the Tribunal though for deduction of TDS, the view that has been taken in the said case will squarely be applicable in the assessee s case also for the reason that the management service agreement referred in the said decision pertains to the same agreement as that of the assessee in the present case. We do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 881/M/2024 (A.Ys. 2014-15 2013-14) 18. These appeals are filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) ( ld.CIT(A) for short), National Faceless Appeal Centre ( NFAC for short) passed u/s. 250 of the Income Tax Act, 1961 ( the Act'), for different assessment years. 19. As the facts are identical in all these appeals, we hereby take ITA No.1455/Mum/2024 pertaining to A.Y. 2016-17 as a lead case. 20. The ground raised by the assessee in ITA No. 1455/Mum/2024 (A.Y. 2016-17) reads as under: 1. The Learned CIT(A) erred in confirming the short credit of TDS given by the A.O. to the extent of Rs. 15,10,82,044/-. In doing so, he has disregarded the rectification application filed with A.O. and details provided. He ought not to have done so. 21. As the issue of non deduction of TDS for the payment made for managerial services received by the assessee from Lloyds Register of Shipping has already been decided by the Tribunal for this year and earlier years in favour of the assessee, the only issue that has been raised by the assessee in these appeals pertains to non grant of TDS credit by the lower authorities. The assessee has also submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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