TaxTMI 
TaxTMI 
2012 (6) TMI 314
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....nce and accounting matters. In consideration of rendering of services the Singapore Company agreed to receive the costs incurred by it. The cost recovery according to the agreement was based on the time spent for rendering the services. The Chartered Accountant's report (by KPMG) certified that the amounts charged to the assessee did not include any profit margin. 2.1 An application under section 197(1) of the Act was made by the Singapore Company for receiving the payments under the agreements without deduction of tax at source. The Assessing Officer after considering the application issued a certificate under section 197. The assessee was authorized to make payments to the Singapore Company without deduction of tax at source. Three certificates in all were issued at various points of time. These certificates were issued by different officers, one of whom was an Addl. CIT. The details of the invoices, the dates of application and the dates on which certificate under section 197 was issued are detailed in page 43 of the order dated 28-8-2009 of ITAT. These certificates were never cancelled at any time. The transactions were accomplished and payments were made on the basis of the....
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...., under section 201 of the Income-tax Act. These conclusions are available from pages 52 to 53 of the order of the Tribunal, the discussion for which commences from page 45 onwards. (ii) The Tribunal noted that certain proceedings for regular assessment under section 143(2) for the assessment year 2004-05 had been completed after initiation of proceedings under section 201. The intimation for assessment year 2005-06 was also issued after such date. While concluding these proceedings, no disallowance was made under section 40(a)(i) for the alleged non-deduction of tax at source. No transfer pricing adjustment had also been made although it was disclosed in the return that only costs were being reimbursed. By such conduct, the revenue in assessment proceedings accepted that no tax was required to be deducted at source. As a result, the lower authorities were not right in raising the demand under section 201 of the Act. The discussion on this point is in para 89 of the Tribunal's order commencing from page 53. (iii) On the aspect whether the reimbursement represented payment for a service, the Tribunal answered in the affirmative. The Tribunal further held that the service satis....
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....al on this aspect had held that the reimbursement of costs constituted 'fees for technical services' under the Act as well as the Treaty. Hence, tax was required to be deducted at source. In the conclusion, however, it was stated that "Hence, we hold that the authorities below were justified in holding that tax was not required to be deducted on the ground that the appellant-company reimbursed the expenses as the amounts payable were to be taxed in the hands of recipients as fees for technical services as per DTAA". In the light of the conclusion in the preceding sentence, the usage of the word 'NOT' in the above sentence appears to be a typographical error. Accordingly the last two sentences of paragraph 103 at page 66 of the Tribunal order are substituted by the following sentences: "Therefore, in the instant case, section 195 will be applicable because reimbursement of expenses relates to fee for technical services. Hence, we hold that the authorities below were justified in holding that tax was required to be deducted on the ground that the appellant-company reimbursed the expenses as the amounts payable were to be taxed in the hands of recipients as fees for technical servi....
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....efore the High Court. In such circumstances, it cannot be said that there is a mistake apparent from records within the meaning of section 254(2) of the Act. If 'offshore' services mean services outside India, then the issue would be governed by the ratio of the Supreme Court decision in Ishikawajma Harima Heavy Industries Ltd.'s case (supra) as also the Karnataka High Court's decision in Jindal Thermal Power Co. Ltd.'s case (supra). Further, such a contention would then merge into ground No. 3 which is being dealt with separately. As a result, there would be no mistake requiring any rectification. Even Circular No. 1 of 2001 explaining the rationale of substituting Explanation 2 to section 9(1) has indicated the existence of doubts on the interpretation of law. It is with a view to put to a quietus to such doubts, the circular states that the law is being retrospectively amended. The Board circular admits the existence of doubts indicating the possibility of duality of opinions. When duality of opinions exists, there cannot be said to arise a mistake apparent from records. 5. In ground No. 3 it is stated 'the Hon'ble ITAT had concluded since the services had been provided offsh....