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TMI Blog2024 (11) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds raised by the assessee read as under:- 1. The Order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in dismissing the appeal without giving sufficient opportunity of being heard to the appellant. 3. The Commissioner of Income tax (Appeals) erred in confirming the disallowance under section 40(a)(i) r.w.s. 195 and 9(i)(vii) of the Act 3.1 The Commissioner of Income tax (Appeals) erred in confirming the treatment of marketing fees paid to Natronix Singapore and SPEL America as 'fees for technical services'. 3.2 The Commissioner of Income tax (Appeals) should have found that the nature of work of Natronix Singapore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l knowledge or expertise has been made available to the assessee either by Natronix or SPEL America and hence the payment is not fee for technical services. 4. The appellant relies on decisions in CIT Vs. Faizan Shoes Pvt.Ltd. 367 ITR 0155 ; GE India Technology Cen (P) Ltd. Vs CIT 327 ITR 456 (SC) As is evident, the sole issue that arises for our consideration is disallowance made by Ld. AO u/s 40(a)(i) for want of TDS on certain payments. 2. The Ld. AR advanced arguments and filed written submissions. The Ld. Sr. DR also advanced arguments supporting the case of the revenue. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. The assessee being resident corporate assessee is stated to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuant to Marketing Service Agreement dated 01-04-2009 which was extended on 01-04-2012. This entity was also free to develop and carry out marketing campaign for the assessee at its sole discretion. Taking the same view, Ld. AO made disallowance u/s 40(a)(i) for want of TDS. 5. The Ld. CIT(A) endorsed the stand of Ld. AO and held that payees had special expertise in the field of marketing / managerial services and rendering of such services was critical to the business of the assessee as carried out in India. Reliance was placed on the decision of Hon'ble High Court of Madras in the case of Regan Powertech Pvt. Ltd. (110 Taxmann.com 55) to support it conclusion. The assessee's reliance on the terms of DTAA was also rejected on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould fall under Article-7 as business profits. The Ld. AR has drawn our attention to the nature of services as contained in relevant clauses of the agreement which read as under: - Between Appellant and Natronix Semi Conductor Singapore "4. Service Strategy: N-sg shall develop and carryout suitable campaign as it deems necessary or advisable in its sole discretion. In this regard, N-sg shall be solely responsible to develop materials, develop demographic customer profiles, and coordinate all service efforts through all available channels. In addition to the foregoing, N-sg shall provide such advice, assistance and any other services as SPEL-ln Et N-sg may agree from time to time during the term of this Agreement" Between Appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the payees do not have any PE in India, the same would not be taxable in India in terms of cited judicial decisions. Another argument of Ld. AR is that the impugned payments would be business profits for the payees and therefore, the same, as per the terms of applicable DTAAs, would be taxable in Singapore and US only. 8. We are of the considered opinion that the terms of DTAA or the provisions of the Act, whichever are more beneficial to the assessee, would apply. All these arguments as stated by Ld. AR need to be re-examined by lower authorities. The terms of the agreement, nature and place of services rendered would be decisive factors to ascertain the nature of payment. Beside this, the finding that whether the payees have PE in In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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