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TMI Blog2024 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... it Goyal, CA For the Department : Ms. Surbhi Sharma, CIT-DR ORDER PER MADHUMITA ROY, JUDICIALMEMBER:- This appeal by the Revenue is preferred against the order passed by the ld. CIT(A), Delhi-43 dated 31.01.2024 pertaining to A.Y 2012-13. 2. The grounds of appeal taken by the Revenue are as under: 1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in holding that the income paid to foreign associated enterprises/.group companies of the assessee company are not chargeable to tax in India and the assessee was not liable to deduct tax at source on such payments. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the amount paid by the assessee to the foreign AEs for the services utilized for business of onsite services carried on by the assessee outside India would not be taxable in India and erred in holding that the case of the assessee is covered under exception u/s 9(1)(vii)(b) of the I.T. Act, and further, the Ld. CIT(A) also erred in not considering that the AO rightly made addition u/s 9(1)(vii) of the Act. 3. Whether on the facts and in the 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 ..... rovert that the coordinate bench has passed a consolidated order allowing the appeals of the assessee for the A.Y 2013-14 to 2018-19. 6. We have heard the rival submissions and have carefully perused the relevant material on record. We have perused the order of the coordinate bench dated 16.08.2024 and find force in the contention of the ld. counsel for the assessee that the issue is squarely covered in favour of the assessee and against the Revenue. The co-ordinate bench, in the said order held as under: 3. We have heard the rival submissions and perused the material available on record. The assessee is a Public Limited company engaged in the business of providing IT/ITES Services. The assessee is engaged in 3 lines of businesses i.e. software services (including engineering services), infrastructure services and business processing outsourcing (BPO). The case of the assessee was taken up for verification on the basis of information received from systems for verification of Form 15CA/ 15CB with respect of various remittances made to different subsidiary companies in different countries without deduction of tax at source u/s 195 of the Act. Ultimately an assessment was framed u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded by the Hon'ble Tribunal: 1. That the Master Service Agreement entered into between the Assessee and the foreign AEs is in the nature of a business arrangement, by which the dominant intention of the parties to come together and serve the overseas customers is fulfilled; 2. That the Assessee was merely distributing the receipt of payment from the overseas customer to the group entities for their share of the work, and 1. That the payment received by the foreign AEs from the Assessee was only in the nature of revenue sharing and cannot be construed to mean that services were provided by the foreign AEs to the Assessee. (Para no.15, Page No.35- 37) 2 The Hon'ble Tribunal further held that both the Assessee and the foreign AEs are jointly rendering services to the customers located outside India, billing is done on a consolidated basis on the customer by the Assessee (including the services rendered by the foreign AEs to the customer located outside India); payments are received by the Assessee from the customer located outside India and thereafter, revenue is shared by the Assessee with the foreign AEs for the proportionate volume of services rendered by the foreign AEs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside India and are also delivered directly to the customers outside India. the Assessee as a corollary also delivered directly having availed the services of the foreign AEs outside India in respect far consider the purpose of business of providing such onsite services to the customers outside India and therefore, in terms of first limb of the exception carved out in clause (b) of section 9(1)(vii) of the Act, the amount paid by the Assessee to the foreign AEs for the services utilized for business of onsite services carried on by the Assessee outside India would not be taxable in India. (Para no.24, Page No.46) Payment made by the Assessee to foreign AEs was for making or earning income from a source outside India 1. Thereafter, the Hon'ble Tribunal categorically held that agreements with customers were concluded outside India, services were rendered directly on the customer's server located outside India and payment was also received in foreign exchange from outside India; therefore, onsite software services represent a separate and independent function of the overall business of the Assessee. As a corollary, the payments received by the foreign AEs from the Assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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