TaxTMI 
TaxTMI 
2022 (11) TMI 405
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....ia." 2. Before us, the Ld. DR for the Revenue had drawn our attention to paragraph 4 of the order passed by the AO, wherein the AO had mentioned that assessee had paid the reference charges of Rs. 6,33,50,000/- to M/s. CX Partners Pte Limited and consultancy charges of Rs. 1,69,60,000/- to M/s. Koi Structured Credit Pte. Ltd. without deduction of tax at source. 3. The Assessing Officer had issued notice calling upon the assessee as to why the amount paid by the assessee to these concerns be not disallowed in view of Section 195 read with Explanation 2 to section 9(1)(vii) of the Act. 4. In response thereto, the assessee had filed the submission before the Assessing Officer wherein he had submitted that the amounts were paid by him to these two concerns in relation to the issuance of debentures as the sister concerns of these two concerns have made the investment of Rs. 370 crores in its company. It was submitted by the assessee that out of receipt of Rs. 370 crores, Rs. 8 crores were paid as reference fee to the above said two companies. Further, it was submitted that the reference services rendered by these two companies were not in the nature of 'technical services&#....
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....ose control is in India and hence the provisions of Section 195 are applicable." 7. Based on the above said finding of the Assessing Officer, the Ld. DR had made two submissions : (1) that the services rendered by these two Singapore companies were not in the nature of 'reference fee' and (2) that these two companies are having control in India, therefore, the provisions of section 195 are applicable. Further, it was submitted by the Ld. DR that the services rendered by these two companies to the assessee were in the nature of 'consultancy services' and therefore, the assessee was bound to deduct the TDS on the said amount paid by the assessee and therefore, the AO had added back the amount of Rs. 8,03,10,000/- to the income of the assessee. 8. The Ld. DR had submitted that the Ld. CIT(A) has not considered the above said categorical finding of the AO and Ld. CIT(A) had granted the relief to the assessee. Our attention was drawn to the order of the Ld. CIT(A), more particularly, to paragraphs 5.3 to 5.6 which are the following effect. "5.3. I have carefully considered the assessment order, grounds of appeal and AR's submissions in this regard. The....
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.... 2. KOI Structured Credit PTE Limited Standard Chartered Bank 3. Samena India Credit (Singapore) Pvt. Ltd Citi Bank 4. DMI Income Fund PTE Limited Standard Chartered Bank 5. Arch Reinsurance Limited, Bermuda Custodian Bank, Deutsche Bank AG, DB House, Hazarimal, Somani Marg, Mumbai 10. The Ld. AR further submitted that all these five companies are not residents of India. The Corporate Tax Division - Controller of Income-Tax, Singapore has issued a certificate in favour of M/s. CX Intermediate Capital Fund I PTE Ltd., certifying that the said company is a resident of Singapore (Pg 90 of the Paper Book.). Similarly, the Ld. AR had also drawn our attention to Page 91 whereby the SEBI had issued a Certificate of Registration in favour of M/s. KOI Structured Credit PTE Ltd. on 03.09.2014 as a Foreign Portfolio Investor. This company is also having a registered office in Singapore and the same is clear from its profile at Page 98 of the paper book. M/s. Samena India Credit (Singapore) Pvt. Ltd. is a company incorporated in Singapore and this company was also granted a Certificate of registration by SEBI recognized as a Foreign Portfolio Investor, vide ....
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....agent or provide any services (incl. financial services) with respect to raising of the capital by the Company. The referral fees herein shall be payable by the Company without any set-off, counterclaim withholding (including withholding tax) or deduction of any kind under any applicable laws in India. This letter shall be governed by an construed accordance with the laws of India. 14. Similar to that effect is the agreement dated 18.01.2016 at page 54 of paper Book is reproduced hereinbelow: "We refer to the capital raising plan of INR 4,000,000,000 (Rupees Four billion) through the issue of INR denominated rated and listed non-convertible debentures (the "Debentures") by the Company. We are writing this letter to record the agreement between us in relation to the fees payable by the Company in relation to the issuance of the Debentures. Under this letter, the Company agrees to pay to Koi Structured Credit Pte Limited a fee of INR 16.96 million in US Dollars at the exchange rate prevalent on the date of payment due upon successful subscription of the Debentures. The fees herein shall be payable by the Company without any set-off, cou....
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....r technical services'. The expression 'fees for technical services' finds meaning in Explanation 2 to Section 9(1)(vii) of the Act; broadly speaking, the said Explanation prescribes that 'fees for technical services, means any consideration for rendering of any managerial, technical or other consultancy services, including the provision of services of technical or other personnel, but does not include consideration for any construction, assembling, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head 'salaries'. 18. We may fruitfully refer to the scope of services rendered by these two companies to the assessee. Both the contract dt. 18.01.2016, which are reproduced hereinabove, clearly mentioned that services were required to be rendered by these persons for reference only and for that purpose, the agreement was entered between the parties for making the payment of INR 63.04 million in US Dollars in the case of M/s. CX Partners Pte Limited and INR 16.96 million in US Dollars in the case of M/s. Koi Structured Credit PTE Ltd. In the said letter, it was categorically mentioned ....
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.... Intermediate Capital Fund(I) Pte Ltd., the Assessing Officer in para 4.3. had mentioned that the charges paid by the assessee were in the nature of 'referral fees' only. The payment of referral fees by the assessee to M/s. CX Intermediate Capital Fund(I) Pte. Ltd. is further supported by the agreement and Form 15CB issued by the Chartered Accountant. In view of the above, we are of the opinion that the charges paid by the assessee were in the nature of 'referral fees' only. 22. Merely because the assessee had refereed the fee was payable by the Indian Company to one of these two entities, consultancy charges cannot be a ground to hold that the nature of the payment was covered by Explanation 2 to section 9(1)(vii) of the Act. In this context, the co-ordinate Bench of the Tribunal, in the case of DCIT vs. M/s. Credit Suisse AG (ITA No. 1247/Mum/2016 dt. 09.02.2018) at Paras 7 and 8 had held as under: "7...................................... In this context, the Authority for Advance Rulings in the case of Cushman & Wakefield(S) Pte. Ltd., (supra) has dealt with a somewhat similar situation, wherein the applicant was a resident of Singapore, who had earne....