TaxTMI 
TaxTMI 
2019 (12) TMI 441
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.... the assessee, this Tribunal finds that there was a reasonable cause for not filing the appeal by the Revenue within the prescribed time before this Tribunal. Therefore, the delay of 146 days in filing the appeal before this Tribunal is condoned and the appeal of the Revenue is admitted. 3. Dr. M. Srinivasa Rao, the Ld. Departmental Representative, submitted that the assessee is engaged itself in the business of epublishing. According to the Ld. D.R., the assessee-company undertakes editorial services, multilingual typesetting and data conversion. The assessee-company admittedly transacted with its overseas associated concerns to the extent of more than Rs. 15 Crores. According to the Ld. D.R., the Assessing Officer referred the matter to the Transfer Pricing Officer as required under Section 92CA of the Income-tax Act, 1961 (in short 'the Act'). The Transfer Pricing Officer by an order dated 31.12.2014, found that the transactions with Associated Enterprise outside India was within arm's length and therefore, no adjustment was considered necessary. 4. Dr. M. Srinivasa Rao, the Ld. D.R. further submitted that the assessee claimed Rs. 6,59,53,207/- towards outso....
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...., the Department has filed the appeal against the order of the CIT(Appeals) in respect of the payment made to the non-residents at USA and UK. However, in respect of the payment made to non-residents at Germany and Spain, the assessee has filed the appeal. According to the Ld. D.R., the services rendered by the non-residents are technical services, therefore, the assessee is bound to deduct tax at the time of making the payment. Inviting the attention of this Tribunal to the order of the CIT(Appeals), more particularly at page 26 para 7.8.10, the Ld. D.R. submitted that the services rendered by the non-residents are technical services and the said services were utilised in India. Therefore, the fee paid for technical services would be taxable in India. In other words, according to the Ld. D.R., all the payments made to the non-residents are taxable in India in the hands of the non-residents. Hence, the assessee is liable to deduct tax under Section 40(a)(ia) of the Act. Therefore, according to the Ld. D.R., the CIT(Appeals) ought not to have deleted the disallowance made by the Assessing Officer in respect of the payments made to non-residents at USA & UK also. 7. On a query fro....
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.... nothing but formatting, style and accuracy of text. The copy writer cannot change the substance of the text. According to the Ld. counsel, copy editing was done before typesetting and proof reading. At the best, according to the Ld. counsel, the copy editing involves spelling correction, punctuation, grammar, terminology, etc. to ensure that the sentences are formed in such a manner that the readers of the text can understand easily the substance. In other words, according to the Ld. counsel, copy editors are expected to ensure that the text flows in the language in which they are copy editing. According to the Ld. counsel, in no way it involves a technical service, hence, the payment made for copy editing cannot be considered to be a technical service. 8. Now coming to indexing, the Ld.counsel for the assessee submitted that the indexing is nothing but an arrangement of entries designed to enable the readers to locate information in the documents. According to the Ld. counsel, the process of creating an index is called indexing and the person who does it is called indexer. The main task of indexer is classification of the documents to indicate what the document is about and to....
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....cts of the case without any reason or justification. Referring to the assessment order, more particularly page 6, the Ld.counsel submitted that the legal service rendered from abroad was held to be not taxable in India without any fixed base in IMP Power Ltd. v. ITO (2007) 107 TTJ (Mum) 522. It was also found to be not taxable in India when information service rendered by electronic media promoting downloading in India by the Authority for Advance Ruling in ABC Ltd. (2006) 284 ITR 1. According to the Ld. counsel, the services rendered by the non-residents are not technical services at all. The Assessing Officer himself found in the assessment order that the services rendered by the non-residents are not technical services. 11. Referring to page 8 of the assessment order, the Ld.counsel for the assessee submitted that the expression "fees for technical services" as defined in Explanation 2 to Section 9(1)(vii) of the Act was considered by the Mumbai Bench of this Tribunal in TUV Bayren (India) Ltd. in I.T.A. No. 4944/Mum/2002. The Tribunal found that technical service requires expertise in technology and providing the client such technical expertise. In the present case, accordin....
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....re technical services by the CIT(Appeals). 14. The Ld.counsel for the assessee further submitted that the Department has appealed against the order of the CIT(Appeals) in respect of payment made to non-residents at USA and UK. In respect of the payment made to the non-residents at USA and UK, the CIT(Appeals) deleted the disallowance made by the Assessing Officer on the ground that the technology was not made available to the assessee, therefore, there cannot be any disallowance under Section 40(a)(ia) of the Act. However, in respect of payment made to non-residents at Germany and Spain, the CIT(Appeals) found that the "make available" clause was not available in Double Taxation Avoidance Agreement between India and Germany and India and Spain. Therefore, the CIT(Appeals) found that the services rendered by the non-residents are technical services, hence, the payment made to non-residents by the assessee is taxable in India, hence, the assessee is liable to deduct tax. Therefore, the assessee filed appeal against the order of the CIT(Appeals) in respect of payment made to non-residents at Germany and Spain. The Ld.counsel further submitted that in respect of USA, UK, Germany ....
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....h knowledge imparted to the nonresident company. Since there is no technology involved, the provisions of Section 9(1)(vii) would not apply to all the above said services. Besides the certificates in form 15CA and 15CB were not obtained and filed online. Hence, the assessee was required to deduct tax on the payments made to non residents for the above services, provisions of Section 195(6), 195(2), (3) and (7) have not been complied with." 16. We have carefully gone through the ground No.2 in the grounds of appeal raised by the Revenue before this Tribunal. For the purpose of convenience, ground No.2 raised before this Tribunal is reproduced, which reads as follows:- "2. The learned CIT(A) failed to appreciate the fact that the nature of services rendered by the non-resident individuals do not involve any technology. As per DTAA, the term "professional services" defined as independent activities of scientific, literary, artistic, educational or teaching activities as well as independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. As seen from the nature of services rendered by the non-resident individuals, the work of tr....
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....the case, I hold section 9(1)(i) has no application in this case and the payments received by the non-residents cannot be assessed as their business income in India u/s 9(1)(i)." 18. However, the CIT(Appeals) found that the services rendered by the non-residents are technical in nature. At para 7.8.7., the CIT(Appeals) referred certain professionals and observed that the services rendered by them are technical nature. At para 7.8.8, the CIT(Appeals) referred the decision of this Tribunal in Cosmic Global Ltd. (supra) and found that this decision is not applicable to the facts on hand. It is not in dispute that this Tribunal in categorical term found that language translation is not a technical service. The Mumbai Bench of this Tribunal in IMP Power Ltd. (supra) found that even the legal service rendered from abroad was not taxable in India without permanent establishment in India. The CIT(Appeals) without considering these decisions, has simply referred to some of the provisions which are not connected with the present case and distinguished the case of Cosmic Global Ltd. (supra) without recording any reasons. It is a well settled principle of law when the authorities, who are e....
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....of Section 195 of the Act. Section 195(6) of the Act says that the person responsible for paying to a non-resident any sum whether or not chargeable under the provisions of Income-tax Act, shall furnish the information relating to payment of such sum, in such form and manner, as may be prescribed. Rule 37BB of the Income-tax Rules provides for furnishing such information in Form 15CA and 15CB. Sub-section (6) of Section 195 of the Act does not require the assessee to deduct tax. What is required is furnishing information in the specified form, namely, Form 15CA and 15CB. However, subsection (1) of Section 195 of the Act requires the assessee to deduct tax at the time of credit of such income to the account of the payee. The Apex Court in Transmission Corporation of A.P. Ltd.(supra) examined this issue and while interpreting Section 195(1) of the Act held that the taxpayer in India is liable to deduct tax in case the payment made to non-resident is liable for taxation in India. Therefore, the assessee is required to deduct tax under Section 195(1) of the Act. Provided the non-resident recipient is liable to pay tax. The violation of Section 195(6) of the Act and failure to file c....