TaxTMI 
TaxTMI 
2017 (9) TMI 478
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...., which are in the business of Port and container terminal operations. In response to the notice issued u/s. 142 (1) of the Act, the assessee filed its return of income on 31/03/2001, declaring total income of Rs. 4. 51crores. The Assessing Officer (AO)completed the assessment, u/s. 143(3)r. w. s. 147 and 144C (3) of the Act, on 28/01/ 2011, determining its income at Rs. 4. 67 crores. 2. Effective ground of appeal is about taxability of Fees for Technical Services (FTS)/Royalty as per the provisions of the Act and Indian Netherland tax treaty. During the assessment proceedings, the AO found that the assessee had received an amount of Rs. 1, 67, 58, 000/-from Shanghai Zhenhua Port Machinery Company Ltd. , China(ZPMC), that it did not disclo....
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....ulated in order dated 24/07/2008 in the case of GPPL by the AO of that assessee. He further observed that the design for the crane was decided by APMM and ZPMC, that the group companies didn't have any say in change of design of the crane, that all the technical activities were carried out by APMM on behalf of its group companies worldwide, that the payment was actually in the nature of FTS. Referring to Article 12 of the DTAA, he held that he held that income had accrued to the assessee from India and was chargeable to tax as fees for technical services. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA) and made elaborate submissions. It also relied upon certain case laws. Aft....
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....the MPA, ZPMC was required to pay to the assessee a fixed amount of consultancy fees per crane sold under the SPC, that GPPL had entered into SPC with ZMPC towards supply of 21 cranes, that persuant to SPC certain payments were made by GPPL and to ZMPC towards the purchase of the cranes, that consultancy fees received by the assessee from ZMPC for rendering services outside India could not be deemed to accrue or arise India as per section 5 read with section 9 of the act, that same was not taxable in India, that the AO had failed to examine the taxability of the consultancy fees received by the assessee under the provisions of the Act and had directly concluded that same was taxable in India as per the tax treaty, that the provisions of tre....
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.... a person non-resident in India i. e. ZPMC, China, that the payment could not be subject to tax in India as per articles 12 of the treaty, that in view of restricted definition of FTS in Article 12 (5) (b) of the treaty, the consultancy fees received by the assessee could not be subject to tax in India, that it was not making available any technical knowledge experience and skill etc. , that it was not developing or transferring any technical plan or design for GPPL, that the provision for services rendered by the assessee might require technical skill and experience, that it would not enable GPPL or ZPMC to apply that skill and experience on their own in future activities, that purchase price was to be paid by GPLL, that disputed amount wa....
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....Seimens Aktiengesellschaft, NOCIL, Uhde GMBH(supra), the Tribunal has clearly held that royalty and FTS should be reckoned for taxation only when it is received and not otherwise. In the matter of Seimens Aktiengesellschaft, following question was raised by the Revenue (I. T. Appeal No. 124 of 2010, )before Hon'ble Bombay High Court: "i) Whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that the Royalty and fees for technical services should be taxed on receipt basis without appreciating the fact that the Hon'ble Supreme Court has held in the case of Standard Drum Motors Private Limited V/s. CIT, 201 ITR 391 that the credit entry to the account of the assessee non-resident in the boo....
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....tside India to a nonresident i. e. ZMPC and that same were utilised in manufacturing the cranes outside India i. e. in China. In the circumstances consultancy fees received by the assessee from the Chinese entity for rendering services outside India cannot be deemed to accrue or arise in India, as per the provisions of section 5 read with section 9 of the Act. Consequently the same would not be taxable in India. India has signed the DD AA with the Netherlands and taxability of consultancy services had to be examined first as per the provisions of the tax treaty. In the case under consideration the AO, without referring to the treaty, had applied the provisions of the Act. In our opinion, the stand of the AO/FAA cannot be endorsed, as the pr....