TaxTMI 
TaxTMI 
2022 (5) TMI 770
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....istered under section 12A of the I.T. Act, 1961 and is running a University under the name and style of M/s. Sharda University which is engaged in the business of providing Medical Education, Hospital Services and other Educational Courses at Greater Noida. A TDS survey under section 133A of the Income Tax Act, 1961 was conducted on 29.03.2017 at the educational premises of the deductor. 2.1. During the course of such TDS survey, it was found that the assessee had remitted abroad amounts under various heads viz. Consultancy Fees on Student Recruitment, Commission on Student Recruitment, Participation Fee for Education Tour, Advertisement/ Marketing Promotional Activities, Educational Tours, Ph.D Thesis Evaluation, Education Fair Charges etc. However, the assessee has not made TDS on these foreign remittances. The statement of Shri Ram Phal Gupta, Advisor Finance, Sharda University was recorded on 29.03.2017 to ascertain the remittances which had been made abroad and to ascertain the nature of these payments. Subsequently, a letter dated 08.05.2017 was issued to the assessee requiring it to furnish information regarding TDS on foreign remittances from 01.04.2009 to 31.03.2013. Th....
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.... counselling of International students for Party A's courses and Party B accepts this non exclusive appointment as an authorized consultant. 4. This agreement shall be effective for one year from 30/07/2015 to 30/07/2016 and based on satisfactory performance and targets achieved, will be renewed for a similar period of time. 5. Exclusively you will work only with Sharda University in India. 6. Either Party may terminate this Agreement giving a thirty (30) days notice in writing. 7. The consultants can book candidates for Provisional consideration of admission upon payment of the Admission Fees (as specified in the Program Prospectus & Website) th tough and Demand Draft in favour of Sharda University payable at New Delhi, India or to Sharda University Bank Account as mentioned on the website. 8. Complete candidate files, fully attested by Party B, shall be scanned and emailed to Sharda University ([email protected]) prior to admission. These documents must be verified and attested by the consultant before emailing/sending to Party A. The original documents should be brought by the student himself. The admission office of Sharda Univ....
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.... B be found exploiting candidates for services that they either cannot provide or have no right to provide, shall immediately be struck off from the University's list of consultants. Signed & Stamped & Dated Signed & Stamped & Dated Mr. Andy Ngelate For & On behalf of Party A For & On Behalf of party B (Sharda University) MBS ADMISSION Witnessed By: Witnessed By: 1. 1.Singto Barisuka 2. 2. Sonia Obanu" 2.5. He analysed the provisions of DTAA with the respective countries and the MoU between the assessee and the consultants and noted that the assessee has engaged them on behalf of it for recruitment of international students to assessee's various courses offered in India. Rejecting the various explanation given by the assessee, the AO held the commission paid by the assessee to the consultants as Fee for Technical Services (FTS) under section 9(l)(vii) in the nature of consultancy and managerial services on account of the following reasons : a) The consultancy fees on student recruitment is admittedly paid to the agents appointed by Sharda University to visit various school at local area and to collect the data of prospect....
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....the payments for Faculty Development charge is concerned, the AO noted that faculty development program is a technical service because it is not merely in the nature of a discussion or advice but specific programs not only to increase the technical knowhow but also other skills of any faculty. The AO similarly held the assessee as defaulter for not deducting tax in respect of professional expenses. 3.3. Since, the assessee has not deducted any tax from the payments made to the foreign firms and nonresidents, the AO rejecting the various explanations given by the assessee held the assessee to be an assessee deemed to be in default under section 201(1) of the I.T. Act, 1961 read with section 195(1) of the I.T. Act, 1961. Since the assessee was deemed to be an assessee in default of tax, therefore, the A.O. charged simple interest at an amount of Rs.20,21,730/- as interest under section 201(1A) of the I.T. Act, 1961 for the A.Ys. 2010-11 to 2017-18 and also initiated penalty proceedings under section 271C separately against the assessee for failure to deduct tax at source for the A.Ys. 2010-11 to 2017-18. 4. In appeal, the Ld. CIT(A) upheld the action of the A.O. by observing as....
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....onsideration of admission upon payment of the Admission Fees (as specified in the Program Prospectus & website) through a Demand Draft in favour of Sharda University payable at New Delhi, India or to Sharda University Bank account as mentioned on the website. 8. Complete candidate file, fully attested by party B, are to be scanned and emailed to Sharda University ([email protected]) prior to admission. It has been stipulated that these documents must be verified and attested by the consultant before emailing/ sending to the assessee. 15. Confidentiality & Integrity a) Party B undertakes to keep confidential and not to deal with any of the information, documents, material and details acquired under this Agreement for other than the sole purpose of Party B's performance of his/ her obligations under this Agreement and towards the interests and benefits of the Party A. b) Should Party B found exploiting candidates for services that they either cannot provide or have no right to provide, shall immediately be struck off from the University's list of consultants." 4.16. On perusal of the agreement following facts emerge : 1. Sharda ....
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.... in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India. (vii) income by way of fees for technical services payable by- .....(c) a person who is a non-resident, where the fees are payable in respect of services utilized in a business or profession carried on by such person in India or for the purposes of making or earning tiny income from any source in India : ..... Explanation 2.-For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) 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". Explanation.-For the removal of doubts, it is hereby declared that for the purposes of this Section, income of a non-resident shall be deemed to accrue or arise in India under Clause (v) or Clause (vi) or Clause (vii) of sub-se....
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....These technical and professional advice to the students were given by the consultant having technical expertise in the field. The appellant cannot just appoint any entity for this special job which is resulting into more business to the appellant. It is also certain such managerial and consultancy services are not available at hand internally to the appellant otherwise it could have sent its own personnel for this purpose to different countries and could have saved money also. 4.26. In the circumstances when the appellant is appointing a foreign consultant for the special job by signing a memorandum of understanding to various consultants in different countries, it is evident that without such expert advice from these foreign consultant the appellant could not have got the business in the form of admission of foreign students. In lieu of such services the appellant is making payment of fee based on the number of students taking admission in the institutions run by the appellant university. In view of all such facts, I am of the opinion that the services provided by all the firms/company are in the nature of managerial and consultancy services which clearly falls within the....
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....ure and fall under the purview of "Fess for technical services" u/s 9(l)(vii) of the Act 4.30. Similarly, the services for Faculty Development and Professional Services ure si.io technical in nature. It is indisputable that the training of faculties/staff who are already experts in their fields can be rendered only by professionally and technically more qualified persons than them. The faculty development program is a technical service because it is not merely in the nature of a discussion or advice but specific programs to not only increase the technical knowledge but also other skills of any faculty. The contention of the assessee that the income does not accrue or arise in India and does not fall within the purview of Section 9(1)(vii) is not correct as any service^ for Faculty Development and Professional Services can be given by an expert of that field and will be in the nature of technical services only. 4.31. In view of all such facts, I am of the opinion that the services provided for Ph. D Thesis Evaluation, Faculty Development Expenses and Professional Fees are in the nature of technical services which clearly falls within the ambit of Fee for Technical ....
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....ard to the details of membership/affiliation fee, documents for membership/affiliation fee and details of advertisement for faculty position vide page number 57 to 71 of the submission. These additional evidences were sent to the assessing officer for a remand report on admissibility and merit of the same. A remand report dated 30.01.2018 was received. It is observed by the assessing officer that the assessee had been granted adequate opportunity for presenting his case, hence the additional evidences may not be accepted at this stage as per the provisions of rule 46A of Income Tax Rules. Further, on merit the AO has reported as below : "Without prejudice to the above, reporting in respect of additional evidence submitted by the assessee is as under: The main contention of the assessee is that the AO has erred in calculating TDS liability on payments i.e (i) Expenses and Commission on the student recruitment/ admission, (ii) PhD thesis evaluation, (iii) faculty development expenses,(iv) professional services, and (v) membership/affiliation fees made to non-resident parties is baseless. The above payments must be made after deducting TDS as the sums paid under diff....
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....f the above facts, the submission of the appellant that such remittances were in regard to getting membership a prestigious international educational bodies for global recognition of the university and the courses of International Students are acceptable. Documents do not suggest that su.eh membership fees are in regard to use of any trademark/logo/Goodwill of any foreign educational institutions and therefore cannot be equated with nature of royalty as per tine provisions of section 9(1 ((vi) of the Act. Hence, for failure to deduct TDS on payment of Rs. 7,60,267 for A.Y 2011-12 to 2013-14 on account of Membership and Subscription Fees, the action of the assessing officer to treat the appellant as assessee in default u/s 201 of the Act is incorrect. Charging interest of Rs.97,729/ u/s 201(1 A) of the Act is also found to be incorrect. D. Claim for Lower Rate of TDS @ 10% under the provisions of Section 206AA of the Income Tax Act, 1961 4.42. The assessing officer has elaborately dealt with the issue on page33-35 of tlie assessment order. All the aspects of the issue have been covered by the assessing officer in detail. 4.43. The assessee has stated that ....
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.... be filed by it. 4.48. In view of the above facts, it is evident that the assessee has no explanations for its failure to deduct TDS on the various foreign remittances made and its reliance on the provisions of Rule 37BC is without any basis. Therefore, the action of the assessing officer to charge the rate of deduction @ 20 % is correct. E. Applicability of the provisions of DTAA 4.49. On the issue of applicability of the provisions of DTAA, the assessing officer has elaborately dealt with the issue on page 44-46 of the assessment order. All the aspects of the issue have been covered by the assessing officer in detail. 4.50. The remittances made to the Authorized Consultants are in various countries. From a perusal of the MoUs submitted by the assessee, it has been found that remittances have been made largely to consultants off those countries with which there is no DTAA. In these cases, it implies, that the provisions of Section 9(1)(vii) of tint Income Tax Act, 1961 will be fully applicable. It has already earlier been held that Consultancy Services are taxable in India as per the provisions of Section 9(l)(vii). The assessee was therefore re....
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....n rejecting the appellant ground and submission that the impugned order u/s 201(1 )/201(1A) has been passed as a result of survey proceedings u/s 133A carried out at the premises of the appellant educational trust (Charitable trust) whereas survey proceedings as per the provisions of section 133A cannot be carried out at the charitable trust. Thus the very basis of initiating the proceedings u/s 201(1) being itself wrong and bad in law, the impugned order passed u/s201(1)/201(1A) is also wrong and bad in law and deserves to be cancelled. 2. Because the Ld. CIT(Appeals) has erred both in law and on facts in not adjudicating the specific ground that proper and reasonable opportunity of representing the case before the Assessing Officer and of being heard has not been allowed by the Assessing Officer. 3. Because the Ld. CIT(Appeals) has erred both in law and on facts in rejecting the appellant ground and the submission that the appellant trust is not liable deduct tax at source on payments made to non-resident parties. 4. Because the Ld. CIT(Appeals) has erred both in law and on facts in rejecting the appellants ground and the submission and in confirming th....
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....f appeal Numbers.3 to 5, are concerned these relate to the order of ld. CIT(A) in confirming the action of the AO that the tax was required to be deducted at source u/s 195 on the following payments for which demand was raised: - (i) Commission on Student Recruitment/ Admission (ii) Phd. D Thesis Evaluation (iii) Faculty Development Expenses (iv) Professional services on which tax was deducted. 7.1. The ld. counsel for the assessee drew the attention of the Bench to the following table and drew the attention of the Bench to the various amounts paid on which the AO has treated the assessee as an assessee in default. Financial Year Commission on Student Recruitment/admission Ph. D Thesis Evaluation Professional Services (Advertisement expenses wrongly mentioned as professional services) Faculty Development' Expenses Amount (Rs.) TDS @ 20% Amount (Rs.) Amount (Rs.) TDS @ 20% Amount (Rs.) Amount (Rs.) TDS @ 20% Amount (Rs.) Amount (Rs.) TDS @20% Amount (Rs.) 2010-11 30,000/- 6,002/- 1,88,28 37,656/- 2011-12 5,97,466/- 1,19,493/-'  ....
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.... consideration paid to them by the assessee is 'Fees for Technical Services' as defined under explanation 2 to section 9(l)(vii), and the same is deemed to have accrued in India and therefore, the assessee is liable to deduct tax u/s 195 is concerned, he submitted that if the substance of all the clauses of the MOU are looked into, the agents named as consultants in the agreement were required to market assessee's educational institutions for the sole purpose of admission and counseling of international students for Sharda University courses which is just motivating and convincing these students for taking admission in Sharda university. 7.4. He submitted that A.O. emphasized the word consultant used in the MOU to form an opinion that the agent rendered consultancy services without appreciating the obligation and duties to be discharged by them and going through the MOU terms and conditions in toto. He submitted that the concept of substance over form has been ignored both by the AO as well as CIT (A). He submitted that nomenclature does not decide the real nature of the transaction entered into between the two parties. For the above proposition, he relied on the following decis....
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.... get admission in assessee-university, it cannot be said that he has rendered consultancy services to the assessee. Referring to the decision of the Hon'ble Jurisdictional Delhi High Court in the case of Director of Income tax (Int. Tax) Vs. Panalfa Autoelectrik Ltd ITA No. 292/2014 he drew the attention of the Bench to the same wherein the meaning of -managerial, technical and consultancy services were explained at length. 7.9. He accordingly submitted that it cannot be said that the agents have rendered managerial, technical or consultancy services to the assessee university. The services rendered by the agents are marketing services as per MOU and are not covered in any of the services as provided in section 9(1)(vii) of the Act. 7.10. The ld. Counsel for the assessee referring to the following decisions submitted that when the commission/fee is paid to the non-resident agents for sales/services outside India for the services rendered outside India and the non-resident is not having any permanent establishment (PE) in India, tax is not required to be deducted at source u/s 195 of the Act. a) Marketing is not considered as Fee for Technical Services: i. Le....
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....es were relating to advertisement expenses. He submitted that the assessee had already deducted tax at source on such expenses incurred towards advertisement expenses wrongly considered under the head professional expenses. Referring to the details of the tax paid given at Page no. 40 of the PB, he submitted that there was no default by the assessee in deducting tax, therefore the assessee should not be considered as an assessee in default for the same u/s 201 of the Income tax Act. He also referred to the copy of ledger account of the vendor enclosed at page 156 of the PB. 7.14. He submitted that in AY 2012-13, 2013-14 and 2014-15 in the grounds of appeal, a ground is taken in respect of TDS applicability on Membership Affiliation Fees paid by the assessee. However, the ld. CIT(A) has already allowed relief and therefore grounds on this issue may be treated as not maintainable. 8. The Ld. D.R. on the other hand heavily relied on the orders of A.O. and the Ld. CIT(A). He submitted that a perusal of the assessment order shows that the assessing officer has analyzed the provision of Double Taxation Avoidance Agreements (DTAA) in para 4 of his order. The AO has observed that in ....
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.... nature of technical services. 8.3. He submitted that in respect of remittances for faculty development expenses, the nature of training that is given is to increase the technical knowledge and skills of the faculty and is undoubtedly imparted by highly trained experts and professionals. Thus they would clearly fall within the ambit of FTS and Section 9(l)(vii). 8.4. The ld. DR submitted that a perusal of the copy of MOU (Nigeria) which has been scanned by the AO and is a part of his order from pages 39 to 42, shows that the same does not bear the signature of any witness on behalf of the assessee. Secondly, it is interesting to note that the person who has signed the MOU also has an address in India as evident from para 14 of the MOU. Therefore if the consultant is present in India and has an Indian address then the income paid to him accrues and arises in India and would therefore be liable to tax in India. Therefore what needs to be seen is whether these agents are recruiting students from their own countries or whether they are present in India and are advising potential students from their diaspora present in India. The MOU is not clear in this respect. She accordingly s....
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....refore, the nature of services are in the nature of Fees for Technical Services as per section 9(1)(vii) of the I.T. Act, 1961. It is his observation that the consultant had the duty to verify and attest the records of the candidates before scanning and mailing it along with the complete files of the candidates to the assessee viz., Sharda University. It is a binding condition and precondition that the consultant will work exclusively for Sharda University only. Similarly, the assessee has not deducted tax from payments made to experts for Ph. D. Thesis evaluation, professional services, Faculty Development expenses etc. Therefore, by not deducting tax at source the assessee has violated the provisions of Section 195 of the I.T. Act, 1961. He, therefore, held the assessee as an assessee in default and levied interest under section 201(1A) of the I.T. Act, 1961. 10. We find the Ld. CIT(A) confirmed the action of the A.O. by holding that the services provided by the foreign firms to the assessee falls under the category of fees for technical services under section 9(1)(vii) of the I.T. Act, 1961. The observation of the Ld. CIT(A) has already been reproduced in the preceding paragr....
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....The mere formal description of a person as an agent or buyer is not conclusive, unless the context shows that parties clearly intended to treat a buyer as a buyer and not an agent. Similar decision has been taken by the Hon'ble Supreme Court in the case of Moped India Ltd., vs., Assistant Collector of Central Excise reported in (1985) SCC 147. 10.4. In view of the above decision and various other decisions relied on by the Learned Counsel for the Assessee, we are of the considered opinion that the intention of the agreement and the nature of the services rendered by these agents have to be looked into rather than just wording of the MOU terming the agents as consultants. A perusal of the terms and conditions shows that these persons have to market the assessee's educational courses. The sole purpose for rendering the services was attracting and motivating the international students for taking admission in assessee's university which is nothing but marketing of the educational courses run by the assessee university among the international students. In our opinion it cannot be regarded as consultancy services provided to the assessee. On a pointed query raised by the Bench, the Le....
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.... (vii) income by way of fees for technical services payable by- (a) the Government; or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is a non- resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India: Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976 , and approved by the Central Government.] Explanation 1 - For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976 , shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date.] Explanation 2 - For the purposes of this clause....
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....eable: Omitted by the Finance (No. 2) Act, 1991 , w. e. f. 1- 10- 1991 ] (3) Subject to rules made under sub- section (5), any person entitled to receive any interest or other sum on which income- tax has to be deducted under subsection (1) may make an application in the prescribed form to the Assessing] Officer for the grant of a certificate authorising him to receive such interest or other sum without deduction of tax under that subsection, and where any such certificate is granted, every person responsible for paying such interest or other sum to the person to whom such certificate is granted shall, so long as the certificate is in force, make payment of such interest or other sum without deducting tax thereon under sub- section (1). (4) A certificate granted under sub- section (3) shall remain in force till the expiry of the period specified therein or, if it is cancelled by the Assessing] Officer before the expiry of such period, till such cancellation. (5) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circu....
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.... Section 5(2) is concerned, it is also not disputed that these agents have not rendered any services in India. Since the services have been rendered by them outside India, therefore, it cannot be held that the income for the services rendered by them accrues or arise in India in the case of the non-resident. 10.11. So far as the applicability of provisions of Section 9(1)(vii) of the I.T. Act, 1961 is concerned, we are of the considered opinion that the same is also not applicable. The contention of the Revenue that these agents have been paid fees for technical services rendered by them which is deemed to arise or accrue in India are not correct especially when these agents have not rendered any technical services and the payment made by the assessee to them in our opinion are not fee for technical services. 10.12. Explanation-2 of Section 9(1)(vii) of the I.T. Act, 1961 defines Fees for Technical Services which means any consideration including any consideration for rendering any managerial, technical or consultancy [including the provision of services of technical or other personnel] but does not include consideration for any construction, assembly, mining or like project ....
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....ied and industrial science. Consultancy: is generally understood to mean an advisory service. Further, it may be fair to state that not all kinds of advisory could qualify as technical services. For any consultancy to be treated as technical services, it would be necessary that a technical element is involved in such advisory. Thus, the consultancy should be rendered by someone who has special skills and expertise in rendering such advisory. Let us examine the contract entered into by assessee with a few overseas nonresident agents. The agreements demonstrate that assessee was to pay commission and retention charges for advancement of business of the assessee. The primary services to be provided to assessee by the overseas agent Mr. Ashok Sultan as placed in paper book pages 98-101 is reproduced below: "6. Responsibilities of LPTI: To comment of Mr. Sultan's suggestions & reports without undue delay. To communicate marketing and sales leads to Mr. Sultan for follow up and execution, To keep Mr. Sultan properly and promptly informed on policies, rats and status. A Bi-weekly booking forecast to be supplied to Mr. Sultaln. To keep and c....
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.... JK, Scotland and Ireland market as and make sales calls on them as required. Mr. Naresh Sarvaria will follow up his sales calls as result of the e- mailing comparing and will pass on to the Le Passage to India Tours and Travels Pvt. Ltd. the full e-mail correspondence file for canvassing the sales leads into firm bookings. Mr. Naresh Sarvaria will respond to buyers for information and literature and also assist Le Passage to India Tours & Travels Pvt. Ltd. With distribution of their brochures in the tour operations and MIC (Meetings Incentives, Congresses) market place. Cost of mailing will be billed separately. Mr. Naresh Sarvaria will represent Le Passage to India Tours and Travels Pvt. Ltd. during specified UK Scotland and Ireland Travel Trade Fairs as agreed mutually, cost and out of pocket and travel expenses will be billed by him separately. Mr. Naresh Sarvaria will promote Le Passage to India Tours & Travels Pvt. Ltd. through the media and will assist Le Passage to India Tours and Travels Pvt. Ltd. with press releases, editorials, interviews etc. Mr. Naresh Sarvaria will keep Le Passage to India Tours and Travels Pvt. Ltd. informed about the key industry t....
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....services rendered outside India do not fall within the meaning of FTS u/s 9(i)(vii) of the Act. Therefore, keeping in view the facts and circumstances of the present case and on the basis of various case laws relied upon by the assessee, we hold that the amount of retainer-ship charges and commission paid by the assessee to an overseas nonresident agent is not in the nature of FTS and, therefore, was not liable to be taxed in India and in consequence, assessee was not required to deduct tax therefrom. Ld. CIT(A) himself in Assessment Year 2007- 08 has allowed relief to the assessee on account of non-deduction of TDS on commission payments as noted by us at page 6 of our order. Therefore, keeping in view all facts and circumstances and keeping in view the case laws relied upon by Ld. A.R. we hold that representation charges and commission paid by assessee were not liable to be taxed in India and consequently no tax was required to be deducted and therefore disallowance u/s 40(a)(i) was not warranted. Since, we have decided the issue in favour of the assessee based upon the first limb of the arguments advanced by the Senior Counsel we do not deem it necessary to deal with other two l....
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....se words or expressions, how they are interpreted and understood by the persons engaged in business and by the common man who is aware and understands the said terms. The expression "management services" was elucidated upon by this Court in J.K. (Bombay) Limited versus CBDT and Another, [1979] 118 ITR 312 in the following terms :- "6. It may be asked whether management is not a technical service. According to an Article on "Management Sciences", in 14 Encyclopaedia Britannica 747, the management in organisations include at least the following: "(a) discovering, developing, defining and evaluating the goals of the organization and the alternative policies that will lead toward the goals, (b) getting the organization to adopt the policies, (c) scrutinizing the effectiveness of the policies that are adopted, (d) initiating steps to change policies when they are judged to be less effective than they ought to be." Management thus pervades all organisations. Traditionally administration was distinguished from management, but it is now recognised that management has a role even in civil services. According to the Fontana Dictionary of Modern Th....
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....ment between the respondent-assessee, who has been described as PAL, and the non-resident, who has been described as AGENTA. The relevant portions thereof read as under:- "2. Appointment (1) PAL hereby appoint AGENTA as its commission agent for sale of its products within the territory to the purchaser(s) during the terms of this agreement, subject to and in accordance with terms and conditions set out herein and AGENTA agrees to and accepts the same. (2) It is agreed by and between the parties that AGENTAS representations and acts on behalf and for PAL viz-a-viz any third party shall be legally binding on PAL only when the same are authorized by virtue of a written and signed authorisation executed by PAL in favour of AGENTA. XXXXX 4. Commission (a) PAL agrees and AGENTA accepts that the amount of commission payable to it shall be the difference between consideration which PAL receives in terms of the purchase contract/order form the purchaser(s) and the pre determined guaranteed consideration settled and agreed between the parties, as described in Annexure 1 annexed hereto; (b) The parties agree that all the taxes app....
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....aning of the word "technical" as given in the New Oxford Dictionary is adjective 1. of or relating to a particular subject, art or craft or its techniques: technical terms (especially of a book or article) requiring special knowledge to be understood: a technical report. 2. of involving, or concerned with applied and industrial sciences: an important technical achievement. 3. resulting from mechanical failure: a technical fault. 4. according to a strict application or interpretation of the law or the rules: the arrest was a technical violation of the treaty. Having regard to the fact that the term is required to be understood in the context in which it is used, "fee for technical services" could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with "technical" is "involving or concerning applied and industrial science"." 19. The said term was also interpreted by this Court in case of Bharti Cellular Limited and Others (supra) where emphasis was laid on the element of human intervention, but we are not concerned with the said aspect in the present case. The non-resident had not....
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.... For consultation service under Explanation 2, there should be a provision of service by the non-resident, who undertakes to perform it, which the acquirer may use. The service must be rendered in the form of an advice or consultation given by the non-resident to the resident Indian payer. 22. In the present, case commission paid for arranging of export sales and recovery of payments cannot be regarded as consultancy service rendered by the non-resident. The non-resident had not rendered any consultation or advice to the respondent-assessee. The non-resident no doubt had acquired skill and expertise in thfe field of marketing and sale of automobile products, but in the facts, as notice by the Tribunal and the Commissioner of Income Tax (Appeals), the non-resident did not act as a consultant, who advised or rendered any counseling services. The skill, business acumen and knowledge acquired by the non-resident 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 respondent-assessee on any ....
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....ervices. The nature of services rendered by these foreign agents is simply marketing the services, introducing the foreign students to take admission in the assessee university and therefore, we are of the opinion that no technical services was rendered by these agents. Under these circumstances, we are of the considered opinion that the remittances made by the assessee outside India to these agents as per the terms and conditions of the MOU cannot be deemed to be accrue or arise in India and, therefore, will not be chargeable to tax in India. Since such remittances is not chargeable to tax in India, the assessee was not under an obligation to deduct tax at source. We, therefore, hold that the assessee cannot be treated as an assessee in default in respect of non-deduction of tax under the provisions of Section 201 of the I.T. Act, 1961 in respect of commission on student recruitment/admission. Accordingly, we set aside the order of the Ld. CIT(A) and direct the A.O. to delete the demand of TDS made under section 201 as well as levy of interest under section 201(1A) of the I.T. Act, 1961. 11. So far as Ph.D Thesis Evaluation is concerned, we find the issue arises in F.Ys. 2015-1....
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....e of the Revenue that the Ph.d thesis evaluators have rendered managerial or consultancy services to the assessee. It is their contention that they have rendered technical services to the assessee by evaluating the Ph.d thesis papers. In our opinion, the Ph.d evaluator must have been technically qualified and having technically skilled. However, the question that arises is as to whether these persons by evaluating these papers have rendered the technical services to the assessee? In our opinion, such evaluation of the Ph.d Thesis for which they have received the commission cannot be treated as fees for technical services. By evaluating Ph.d thesis paper, they have not provided to the assessee any technical services but merely applied their skill for evaluating Ph.d Thesis. Therefore, we are of the considered opinion that no technical services were rendered to the assessee by the Ph.d thesis evaluators and the assessee has also not asked for any technical services. We, therefore, are of the considered opinion that the Ld. CIT(A) was not justified in holding the assessee to be an assessee in default for not deducting the TDS from the remittance made to the Ph.d Thesis evaluators unde....
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....ng the payment; e) to an employee of the person making the payments or to any individual or firm of individuals (other than a company) for professional services as defined in Article 14 ; f) for services rendered in connection with an installation or structure used for the exploration or exploitation of natural resources referred to in paragraph 2(j) of Article 5 ; g) for services referred to in paragraphs 4 and 5 of Article 5." 19. In view of the above Article of the Treaty the services rendered by Singapore party for educating the faculty and staff so that their professional and technical knowledge be upgraded/updated cannot be regarded to be the fee for technical services. Further as per provisions of Section Article 7 of DTAA which is applicable in the instant case, the amount paid to Singapore party shall be liable to tax in India only if that party has PE in India. As mentioned earlier, it is an undisputed fact that the non-resident does not have any PE in India. Therefore, the income so earned by the non-resident cannot be said to be chargeable to tax in India. We, therefore, are of the considered opinion that the assessee was not liable to dedu....