TaxTMI 
TaxTMI 
2010 (2) TMI 1228
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....rvices and the balance 50% is in the nature of business receipt of the recipient, when the entire payment is inextricably linked and arises by a single agreement and is part and parcel of the same agreement and is indivisible. 2. The appellant prays that the order of the Ld. CIT(A), Mumbai on the above grounds be set aside and the order of the Assessing Officer be restored. 3. Facts of the case, in brief, are that the assessee is a registered partnership firm and engaged in the business of manufacturing and export of cut and polished diamonds. It is a sight holders of DTC, London. The assessee applied for issue of nil deduction certificate u/s. 195 of the Incometax Act, 1961 (the Act) before the ADIT in respect of payment to DTC for va....
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....n view of this the Assessing Officer held that the services rendered by the DTC are in the nature of technical services and liable to tax at 15% as per the Article 13 of DTAA. 5. Before the CIT(A) it was submitted that continuity of supply service is in the nature of assurance by DTC of continuity in supply of rough diamond during contract period which is presently two and a half years. Such assurance enable sight holder to plan its production schedule in a more stable manner. Intention to offer service is informing six months advance the sight holder about quantity, value and type of diamonds that would be sold to them so that they can plan the affairs better. As regards consistency of boxes the sight holders are sown various qualities of....
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....ansfer of a technical plan or technical design to the recipient of service. It was further submitted that the expression "fees for included services" used in Article 12 of Indo-USA DTAA and the extract of the memorandum attached to Indo-USA DTAA which explains the term "fees for included services" is equally applicable and worth considering. 7. The assessee again submitted that on the same and identical facts and considering legal provisions, the learned ADIT has issued 'Nil' deduction certificate in response to the assessee's application u/s. 195(2) of the Act for the F.Y. 2005-06. It was submitted that there is no change either in facts or in law since then so as to take a different stand on the part of the learned ADIT. It was further s....
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....es and the balance 50% is towards business receipts. He accordingly allowed part relief to the assessee. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 9. After hearing both the sides, we find the learned CIT(A) after going through the Value Added Service (VAS) rendered to the assessee by DTC has considered 50% of the VAS as towards royalty/fees for technical services by holding as under: "I have gone through the details of Value Added Services (VAS). The assessee has availed VAS from DTC for which payment has been made. The issue to be decided here is whether the payment made by the assessee to DTC for availing VAS will come within the purview of royalty/ fees for technical services as defined in section 9 ....