TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 638
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.... copies of different documents in support of its claim. The deductor company had entered into an agreement / contract dated 04th March 2011 with a company namely POL-INOWEX SA of Poland for dismantling and sea-worthy packing of paper mill machinery, and stuffing of all items into containers and loading the containers on trucks which was acquired by the deductor company from HolmensBruk AB, a company from Sweden i.e. the said site was in Sweden. The payment was made to POL-INOWEX SA of Poland, without deducting any withholding taxes. The details of payments are as under: Sl. No. Name of the Recipient Remittance amount (Rs.) TDS amount (Rs.) Date of remittance Nature of payment as mentioned in Form No.15CA 1. POL-INOWEX SA 76,13,180/- 0 02/11/2011 Charges for dismantling of second hand machine 2. POL-INOWEX SA 41,06,640/- 0 18/01/2012 Charges for dismantling of second hand machine The Assessing officer held that the payments made to the non-residents for dismantling and sea worthy packing of paper mill machinery are payments made for "fees for technical services" and is taxable under the Income Tax Act 1961, in view of the specific provisions of section 5(2....
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....ove, the job of the polish company as per the contract was to dismantle, match marking, packing and loading work of the used machinery in 4 months. For this purposes, POL had to arrange competent and adequate number of personnel (workers, supervisors, engineers etc.) including such skilled manpower. POL was made responsible for any damage caused in the course of the preparation, dismantling, packing, removal and transport of the equipment and machinery. Considering the work done by the POL and a perusal of the terms of the contract, I am inclined to agree with the appellant that though technical person were involved, the work done by POI is in nature of a works contract and the project is a project for "dismantling" simpliciter. As held by the Hon'ble Hyderabad ITAT in the case of M/s BHEL-GE-Gas Turbine Service (P) Limited (supra), the work involved in the instant case was of that of disassembly of the plant machinery, and did not involve services of technical nature. 4.2 I am also inclined to agree with the appellant that the AO should have considered the contract in totality and it is not proper to read a single sentence in a contract in isolation to reach a different infe....
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....erred in holding that "Dismantling" would be considered as 'like projects' as provided in Explanation (2) to section 9(1)(vii) of the I.T.Act'61 and is therefore, excluded from 'fees for technical services'. 2. In the facts and circumstances of the case and in law, the Ld.CIT(A) erred in holding that the payments to M/s. POL-INOWEX S.A. of Poland is not taxable in India as " fees for technical services" despite the fact that the job performed by POL is highly technical and skill oriented and included "provision of services of technical and other personnel" . 3. In the facts and circumstances of the case and in law, the Ld,CIT(A) erred in holding that the contract between the Polish company and the assessee is a 'Works Contract' and not contract for technical service despite the fact that the nature of work as per the "Machinery Dismantling and packaging" agreement was within the scope of "fees for technical services" as per Income Tax Act' 61 and also as per India-Poland DTAA . 4. In the facts and circumstances of the case and in law, the Ld.CIT(A) erred by relying on the decision of Hon'ble Hyderabad Tribunal in the case of M/s. Bhel GE -G....
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....sophisticated machinery. Therefore, TDS was required to be deducted. The Ld. CIT(A) had wrongly considered dismantling as "like projects" as provided in Explanation (2) to section 9(1)(vii) of the I.T.Act. The Ld. DR pointed out that payment to M/s POL-INOWEX SA of Poland is taxable in India, on payment basis as they rendered services in India, therefore, TDS was required to be deducted on payment of fees for technical services. No TDS had been deducted, despite the fact that the job performed by M/s POL-INOWEX SA of Poland is highly technical and skill oriented and included 'provision of service of technical and other personnel'. The Ld. DR also pointed out that contract between M/s POL-INOWEX SA and assessee is a contract for technical services because the nature of the work as per the "Machinery Dismantling and Packaging" agreement was within the scope of fees for technical services as per the I.T.Act and also as per the India-Poland DTAA. The Ld. DR also pointed out that ld. CIT(A) wrongly relied on the decision of Hyderabad Tribunal in the case of M/s Bhel GE-Gas Turbine Service (P) Ltd. came to the conclusion that the work was not technical in nature, as the facts are differe....
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....or the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". The above explanation clearly says that "fees for technical services" does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". The Ld. AR for the assessee also pointed out that the term 'like project' includes dismantling i.e. 'like projects' mean dismantling also. He has also pointed out that the assembly means dismantling also. Ld. AR also pointed out that there is a difference between 'contract of work' and 'contract of service'. In the case of assessee under consideration the agreement is for 'contract of work' which does not require any technical knowledge and specific skill. If the assessee hires a person outside India does not mean that he is paying fee for technical services. Th....
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....een paid DM 80,000 as per contract for this job and the bill submitted by it for DM 73,714 has been taken on record. As per agreement, the taxes, if any, were to be borne by the applicant. However, at the time of remittance of the above amount, tax was demanded under section 195. The present petition is in respect of this demand". On behalf of the petitioner, Dr. Pal has contended that there is no question of invoking section 9 in this case as the issue is concluded by the Agreement for Avoidance of Double Taxation between India and the Federal German Republic which was notified on September 13, 1960 (see [1960] 40 ITR (St.) 21). Moreover, it has been contended that the approach of the Commissioner is erroneous. The entire responsibility for the construction of a machine was upon the German firm. The German technicians had rendered some service in India for the purpose of setting up the plant and making the plant workable. That service was in connection with and pursuant to the contract to sell a belt vulcanizing press. Therefore, such service cannot be treated as "labour or personal services" as mentioned in article 3 of the Agreement for Avoidance of Double Taxation. In my ju....
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....) Bhel-GE-Gas Turbine Servicing (P) Ltd., 24 taxmann.com 25(Hyd): 16. The above activities involve assembly, disassembly, inspection, reporting and evaluation. CIT(A) examined every activity enlisted above and came to the conclusion that none of the above works involve services of technical nature. The discussion given by the CIT(A) in para 5.4.2 is relevant. We agree with the same considering the settled legal position that routine maintenance repairs are not FTS as held by the Delhi Bench of the Tribunal in the case of Lufthansa Cargo India (P.) Ltd. (supra). For the purpose of completeness of this order, we reproduce below the relevant praragraph of the said decision in the context of the questions raised in the said decision- "In conclusion, Technik carried out the repair work in the normal course of its business in Germany, without any involvement or participation of the assessee's personnel. The overhaul repairs involved were routine maintenance repairs. It cannot therefore be said that Technik rendered any managerial, technical or consultancy service to the assessee. In this view of the matter, we hold that the payments made by the assessee to non-residents workshop....
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.... different from 'technical services'. Thus, the payments made for 'technical services' alone attract the provisions of S.9(1)(vii) and its Explanation 2. Further, it is also a settled issue at the level of the Tribunal that every consideration made for rendering of services do not constitute income within the meaning of S.9(1)(viii) of the Act and for considering the same, first of all the said consideration is for the FTS. Therefore, considering the above, decision of Delhi Bench of the Tribunal, which explained the scope of the provisions, we are of the view that the impugned orders of the CIT(A), for the years under consideration, on this aspect of the matter, do not call for interference. Accordingly, the grounds raised in these appeals of the revenue are dismissed. 17. Without prejudice, the assessee raised the issue of nonapplicability of the provisions of S.201 to the assessment years 2001-02 and 2002-03 and the said argument was never raised or discussed by the lower authorities. Since the impugned order of the assessing officer was passed prior to the amendment to the provisions of S.201 by the Finance Act, 2008 with retrospective effect from 1.4.2003, to....