TaxTMI 
TaxTMI 
2018 (1) TMI 670
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....India Pvt Ltd ("India affiliate" or "CEVA India") as Fees for Technical services ("FTS") under Article 12 of India- Singapore Tax Treaty ("Tax Treaty") by not appreciating: * that such functions do not 'make available' any technical knowledge, skills, expertise etc to the India affiliate; * judicial precedents relied upon by the appellant, inter alia, wherein similar functions were held not to 'make available' any technical knowledge, skills etc to the recipient; * reliance placed by appellant on other Tax Treaties and/or rulings for interpretation of 'make available' concept as per rules of interpretation. 2. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in making and the Hon'ble DRP has erred in confirming addition of tax deducted at source ("TDS") of Rs. 84,87,498, deducted by India affiliate while making payment of administrative support fee, on account of grossing up of such fee by not appreciating that such fee was actually paid 'gross of tax' to the appellant and the India affiliate was not liable to pay any amount over and above administrative support fee of Rs. 8,03....
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.... held that despite specific query assessee has furnished only sample copy of some email and further in para No. 5.1 it submitted only 8 emails out of which 5 are just one liner and balance three are with respect to sending templates. Therefore, he held that Rs. 80391497/- received by the assessee from Indian entity is chargeable to tax as fees for technical services u/s 9(1) (vii) of the Act. He further held that in terms of Article 12(4) of India-Singapore DTAA is attracted, as the assessee has made available the administrative support services. He also drew support from the submission of assessee that its employees visit India in connection with rendering of services and further the assessee did not divulge the specific details as called for but submitted cryptic emails and communications and did not divulge specific details as asked for. He further held that this services are rendered by working closely with employees Indian affiliate for customizing the needs of the payer that helps in improving the performance by employing the best practices and industry experience that assessee possesses in the functions of management, finance and accounts and IT. Therefore, these services ar....
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....rnished. He further submitted that assessee is not providing services, which can be said to be not made available. He referred para No. 5 of the order of the ld AO wherein, the services rendered are with respect to MIS and accounting support and information technology support service. He submitted that if the mails of these services can be looked into it is evident that these mails are provision of simple services. He further referred to the administrative support agreement and stated that assessee has not submitted any evidence with respect to marketing and advertising support as well as treasury functions support. He further supported that in MIS and accounting support also the assessee has only shown the emails pertaining to templates. With respect to the IT support he submitted that these emails do not show how the services are being not made available because they are merely for the query related for system not allowing saving of the data. The other mail is just a query showing the accounting head. He submitted that once this information is shared the recipient of the service would definitely use the identical method to solve that issue. He further submitted that repeatedly do....
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....nt support services and provision of certain guidelines relating to forecast on quarterly reporting for the alignment of data of group entities. In respect to information technology support services simple queries were raised with respect to the saving of data and exact location of certain accounting heads. Further, naturally the copies of the bills do not show the nature of services and does not help in examining whether it makes available the impugned services. Before the lower authorities, assessee has not submitted the complete details. From the above scanty details submitted by the assessee before the Ld. assessing officer, it is apparent that the natures of services rendered by the assessee are very preliminary, basic, or simple support systems. Looking at the nature of the queries in the email as well as the nature of information that is transmitting between the assessee to the service recipient, do not show that if those services are provided for longer period, how the service recipient does not become capable of solving those issues on its own. The ld DRP has made correct observation that in such services if they were provided for a longer period, then naturally recipient ....
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....ey are found to be nowhere similar for the reason that management information systems and consultancy services involved as per that agreement relating to design, modification, upgrading, and maintenance of management information systems and procedures and standard for maintenance of systems documentation. However, in the impugned agreement before us the MIS and accounting support services speaks about internal accounting standards and procedures, US GAAP reporting and budgetary control system. Furthermore, the tax and legal services rendered in those agreements clearly spokes about the legal services provided as well as drafting, reviewing, and approval of various commercial and financial agreements. One of the services mentioned there in accounting consultancy services matches with the MIS and accounting support services before us. The ld Authorised Representative also could not show that services mentioned in both these agreements are similar. Further, in that decision it was noted that copies of details of emails were produced before the lower authorities as well as before us. In that appeal it was the submission of the assessee that it is merely reimbursement of an expenditure ....
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....bove services by the amount of tax deduction at source. The ld Authorised Representative referred clause 6 of the agreement. payer has deducted TDS @10% but according to clause 6 the same shall be on the account of the first party. The ld Departmental Representative relied upon the orders of the lower authorities. 9. We have carefully considered the rival contentions and perused the orders of the lower authorities. As we have already set aside the whole issue of determination of fees for technical services back to the file of the ld Assessing Officer the issue of grossing up of those services is related to that issue only, in the interest of justice, we also set aside ground No. 2 of the appeal of the assessee to the file of Assessing Officer. 10. Ground No. 3 relates to charging of interest u/s 234B of the Act. 11. The ld AR submitted that even if the fees for technical services are held to be taxable in India, the payer should have deducted tax at source thereon. Therefore, no interest u/s 234B is chargeable on the income of the assessee. He further submitted that the entire income of the appellant being non-resident is subjected to tax deduction at source and there was ....