TaxTMI 
TaxTMI 
2020 (9) TMI 773
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....se the issue relating to Section 90 of the Income Tax Act r/w.DTAA between India and United States of America as raised by them in the substantial question framed by the assessee for the first time before this court?. The other substantial questions of law on which the appeal was admitted are as under:- 2) Whether under facts and circumstances of the case the Tribunal was right in holding that the payments made by the appellant to Opportunity International is Fees for Technical Services and affirming the disallowance under Section 40(a)(ia) without considering the provisions of Section 90 of the Income Tax Act read with the Double Taxation Avoidance Agreement between India and USA? 3) Whether under facts and circumstances of the case, the payment made by the appellant is to be treated as fees for technical services under Section 9(1)(viii) read with the double taxation avoidance agreement between India and United States of America? 4) Whether tribunal was within its power to direct the assessing officer toexamine whether tax was deducted at source and consider disallowance under section 40(a)(ia), in respect of the part of the issue which was not in appeal before it? and ....
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....nto account that the nonresident does not have any Permanent Establishment in India and hence no Tax need be deducted from payments made to such non-resident and as far as Women's day expenses, the assessee sought that the same may be treated as business expenditure. 2.6 The CIT (Appeals), by his order dated 29.11.2016, u/s.250(6) of the Act, had gone through the detailed observation submitted by the Authorized Representative and following the judicial precedents, held that with regard to Prior Period Expenses & Credit Rating Expenses, the liability for the appellant company for the payment to M/s. Opportunity International, Chicago, crystallized only on the settlement of dispute with the foreign company. The Assessing Officer has not disputed that the impugned expenditure had not been booked or accounted for in the earlier years. Therefore, the CIT (Appeals) viewed that the appellant company is right in claiming the expenditure in the present Assessment Year 2013-14 on crystallization of the liability following the settlement of the dispute. Therefore, the disallowance made by the Assessing Officer of Rs. 43,08,727/- was deleted by the CIT(Appeals). 2.7 With regard to disall....
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....sessee filed further appeal before the Income Tax Appellate Tribunal, against the disallowance dealing with foreign payments. 4. The Income Tax Appellate Tribunal, by order dated 15.11.2017, held thateach of the payments is in respect of services utilized in India and in the nature of Fee for Technical Services (FTS). Collateral support, is to secure the membership of an entity and benefits for the conduct of its business in India under its aegis; they are clearly in the nature of managerial and technical services falling within the purview of FTS covered u/s.9(1)(vii). Thus, the ITAT dismissed the appeal filed by the assessee with a direction to claim deduction for the year of payment, by remitting the withholding tax and grossing it up. 5. Aggrieved by the dismissal order passed by the ITAT, the appellant/assessee preferred this Tax Case Appeal. 6. The learned counsel for the appellant/assessee by placing reliance on Article 12 of India-USA, Royalties and Fees for Included Services, referred to U.S.-India Tax Treaty Memorandum of Understanding concerning fees for included services which described the category of services defined in paragraph 4 of Article 12. It provides exampl....
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....at similarly the use of a product which embodies technology shall not per se be considered to make the technology available. 9. The only issue involved in this Tax Case Appeal is as to whether the appellant/assessee is eligible for disallowance under Section 40(1)(ia) of the Income Tax Act by taking into consideration the provisions of Section 90 of the Income Tax Act read with the Double Taxation Avoidance Agreement between India and USA. 10. As per the Memorandum of Understanding concerning fees for includedservices in Article 12 of U.S.-India Tax Treaty dated May 15, 1989, clause 4 speaks about "fees for included services" and sub clause (b) refers to technical or consultancy services that make available to the person acquiring the services, technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design to such person. Technology will be considered "made available" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skill....