TaxTMI 
TaxTMI 
2015 (6) TMI 1196
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.... 3. That the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has not appreciated the settled principle in respect of interpretation of prospective or retrospective nature of amendment in the statute as laid down by the Hon'ble Supreme court in the case of CIT Vs Gold Coin Health Food Pvt. Ltd.(008) 304 ITR 308 (SC) and CIT Vs Moser Baer India Ltd. [2009] 315 1TR 460(SC). 4. That the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in not appreciating the fact that the services rendered by the non resident agent to procure orders from foreign buyers are purely technical as well as managerial in nature. Therefore, the provisions of section 9(1) (vii) are clearly applicable on the assessee. 5. That the Ld. Commissioner of Income Tax (Appeals)-ll, Kanpur has erred in law and on facts in not appreciating the fact that the payment by the resident assessee in connection with its business in India to a person outside country is nothing but a fee which has been paid by the resident assessee to the non reside nftor the technical services rendered by him. 6. The Ld. Commissioner of Income Tax (Appeals)-I, Kanpur h....
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....d and since it was not considered by the lower authorities while adjudicating the issue, therefore, the matter is required to be set aside to the file of the Assessing Officer for re-adjudication of the issue in the light of Explanation added to section 9(1)(vii) of the Act by the Finance Act, 2010. 6. The ld. counsel for the assessee, in rebuttal, has contended that this argument was also considered by the Hon'ble High Court in the case of CIT vs. M/s Model Exims (supra), therefore, adjudication of the issue in the light of Explanation added to section 9(1)(vii) of the Act by the Finance Act, 2010 is not called for. 7. Besides, the ld. counsel for the assessee has also placed reliance upon the judgment of the jurisdictional High Court in the case of CIT vs. Model Exims reported in 42 taxmann.com 446 (Alld) and Director of Income-tax (International Taxation)-II vs. Panalfa Autoelektrik Ltd., 49 taxmann.com 412 (Delhi) and the order of the Tribunal in the case of ACIT- 1, Kanpur vs. M/s S. K. International, Kanpur in I.T.A. No. 757/LKW/2014 in support of his contention that where there is no evidence that the nonresident has ever rendered technical services or consultancy ....
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....hey are interpreted and understood by the persons engaged in business and by the common man who is aware and understands the said terms. [Para 14] The services rendered, the procurement of export orders, etc. cannot be treated as management services provided by the non-resident to the respondent-assessee. The non-resident was not acting as a manager or dealing with administration. It was not controlling the policies or scrutinizing the effectiveness of the policies. It did not perform as a primary executor, any supervisory function whatsoever. This is clear from the facts as recorded by the Commissioner (Appeals), which have been affirmed by the Tribunal. [Para 15] The non-resident, it is clear was appointed as a commission agent for sale of products within the territories specified and subject to and in accordance with the terms set out, which the non-resident accepted. The non-resident, therefore, was acting as an agent for procuring orders and not rendering managerial advice or management services. Further, the respondent-assessee was legally bound with the nonresidents' representations and acts, only when there was a written and signed authorization issued....
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....nresident no doubt had acquired skill and expertise in the field of marketing and sale of automobile products, but in the facts, as noticed by the Tribunal and the commissioner (Appeals), the nonresident did not act as a consultant, who advised or rendered any counselling services. The skill, business acumen and knowledge acquired by the nonresident were for his own benefit and use. The non-resident procured orders on the basis of the said knowledge, information and expertise to secure 'their' commission. It is a case of self-use and benefit, and not giving advice or consultation to the assessee on any field, including how to procure export orders, how to market their products, procure payments etc. The assessee upon receipt of export orders, manufactured the required articles/goods and then the goods produced were exported. There was no element of consultation or advice rendered by the non-resident to the respondent-assessee. [Para 22] The technical services consists of services of technical nature, when special skills or knowledge relating to technical field are required for their provision, managerial services are rendered for performing management func....
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....essee, who had stated in his reply on 20.12.2010 that the assessee is engaged in business of manufacture and export of finished leather, shoe upper and leather products. The assessee's main business being export business it has to take the service of foreign agents, who secure export orders and help in execution of such business. For the services rendered by the foreign agents, they are paid commission in foreign exchange by remitting the amount through bank. We find that the CIT (A) has considered the alleged admission in the reply of the assessee and has also perused the agreement from which he found that there was nothing, which could demonstrate that these agents were appointed as selling agents, designers or technical advisers for invoking the provisions of Section 9 (1) (vii) of the Act. The findings recorded by the CIT (A), which have been confirmed by the ITAT is quoted as below:- "5.3.2 The A. O. has also invoked the provisions of Section 9 (1) (vii) on the premise that such payments also full under FTS. In this regard she has observed that normally the exporter appoints the agents as his selling agent, designer & technical adviser for his products. H....
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....der Clause (v) or Clause (vi) or Clause (vii) [of sub-section (1)] and shall be included in total income of non-resident whether or not, non-resident has residence or place of business or business commission in India; or non-resident has rendered services in India. We do not find that the fact situation contemplated or clarified in the explanation added by Finance Act, 2010 is applicable to the present case as in the present case the agents appointed by the assessee had their offices situate in a foreign country and that they did not provide any managerial services to the assessee. Section 9 (1) (vii) deals with technical services and has to be read in mat context. The agreement of procuring orders would not involve any managerial services. The agreement did not show the applicability or requirement of any technical expertise as functioning as selling agent, designer or any other technical services. There are no distinguishing feature in this case, nor do we find that the ratio of the Constitution Bench decision in Commissioner of C. Ex., Bolpur v. Ratan Melting & Wire Industries, (2008) (231) E.L.T. 22 (SC) (para 6) is applicable in as much as in the present case....