TaxTMI 
TaxTMI 
2018 (4) TMI 38
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....engaged in the expansion of its steel business, by way of establishing an Integrated Steel Plant at Kalinganagar, Odisha, for manufacture of steel products. For that purpose it was required to operate a Coke Dry Quenching (CDQ)Plant for Coke Oven Batteries, which are a sub-set of the Integrated Steel Plant. It identified Nippon Steel & Sumikin Engineering Co Ltd, (Nippon), a tax resident of Japan, as having the requisite expertise in the field of CDQ Plants. It entered into four agreements with Nippon, namely 'Imported Plant & Machinery Supply Agreement', dtd. 1/3/ 2014(Contract Price, US$ 2, 70, 00, 000 on FOB/FCA Basis)Designs & 'Drawings Agreement for Plant & Machinery', dtd. 1/3/2014(Contract Price-US$22, 00, 000)Technicians' Superv....
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....ined a Certificate in the prescribed Form No 15CB from an independent Chartered Accountant. As per the assessee, it was of the opinion that no tax was required to be deducted on such income, so, it filed an appealed u/s. 248 of the Act before the First Appellate Authority(FAA) for a declaration that no tax was deductible on such income. After considering the submissions of the assessee, the FAA held that the payment made by the assessee to the nonresident supplier constituted 'fees for technical services'(FTS) in terms of Article 12 of the India-Japan DTAA and hence was liable to tax in India, that there was no dispute over the resident status of the non-resident, taxes u/s. 195 would be deductible at rates specified in Article 12 ....
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.... for technical documentation and knowhow required for the proper installation of plant and machinery (P & M) constituted part of the cost of acquisition of such machinery and not FTS. He relied upon the cases of Outotec GmBH (172 TTJ 337) ;Modern Threads (India) Ltd. (69 ITD 115) (TM) ; Hindustan Aeronautics Ltd. (123 ITD 575) ; Mahindra Forgings Ltd. (153 ITD 388); EMFG & Co , (262 ITR 110) ; Nisso Iwai Corpn. , Japan [88 CCH 0046 (APHC)]; Gujarat Pipavav Port Ltd. (158 ITD 687). He referred to pages 69 to 123, 77, 110, 204, 205, 206, 206A, 207, 209 to 215of the Paper book. He further stated that the FAA had relied upon the cases that were not applicable to the facts of the case under consideration. The Departmental Representative(DR)stron....
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....Tax treaty and that same was liable to tax in India. 4. 1. In our opinion, the short issue to be decided is as to whether the payments made by the assessee to Nippon for supply of D&D, as per the agreement, constituted FTS. The term FTS has peculiar meaning as per the provisions of Expl. 2 to section 9(1)(vii) of the Act. The section stipulates that for the purposes of clause (vii), FTS means any consideration for the rendering of managerial, technical or consultancy services, 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. 4. 2. The settled law, governing the contracts dealing ....
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....tion of theatre equipment was held to be a part of the price of equipment and, therefore, the said payment was held not chargeable to tax in India. Considering the above, the Tribunal held that the CIT(A) was not justified in holding that services rendered in pursuance of the purchase agreement could be taxed as FIS/FTS. 4. 4. Here, we would like to refer to case of Outotech Gmbh (supra). In the said case the assessee a non resident, had provided D&D and engineering documents to its customers engaged in the steel industry in India for the installation operation and maintenance of plant and machinery sold by the assessee to its customers. It raised invoices on its India customers to the tune of Rs. 79. 42 crores. The departmental authoritie....