2022 (11) TMI 419

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....s of appeal : 1. The order of the learned CIT(A) is contrary to law, facts and evidence on record. 2. The learned CIT(A) fundamentally assumed jurisdiction fact wrongly and failed to appreciate the provisions of section 9(1)(vii) of the I.T. Act. 3. The learned CIT(A) erred in holding that deduction of 25% of project value retained by the SSG Technologies is liable to suffer TDS u/s.195 is misconceived since the appellant products are copy right items of owned by the appellant and the SSG technologies only marketed its products* to its clients and hence no technical services were rendered to SSG technologies nor has capacity to do it independently. 4. The learned CIT(A) fundamentally failed to notice that....

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....er the products or product information without prior written approval from the assessee. The agreement further specifies that the assessee will train the partner resources for carrying out pre-sale activity and also implementation and support services. As per the agreement between the parties, the marketing partner will retain 25% of project value as charges for rendering services. During the course of assessment proceedings, the AO noticed that the assessee has remitted charges for rendering services to non-resident marketing partners without deduction of TDS and thus, opined that services rendered by marketing partner, are in the nature of Fees for technical Services (in short "FTS") as per Explanation-2 to Sec.9(1)(vii) of the Act, and t....

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....Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us. 5. The Ld.AR for the assessee referring to marketing, agreement between the assessee and M/s.SSG Technologies, LLC, submitted that if you consider the scope of services rendered by the partner, it is in the nature of simple marketing services without any technical knowledge and thus, same cannot be classified as FTS as per Explanation-2 to Sec.9(1)(vii) of the Act. The Ld.Counsel for the assessee referring to certain judicial precedents including the decision of ITAT Bangalore Benches in the case of Infosys BPO Ltd. v. DCIT (International Taxation) reported in [2022] 66 CCH 0001 (Bang-Trib.) submitted that services rendered by a partner without any knowledge of....

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....f the Act, 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-section (1) and shall be included in the total income of the non-resident whether or not - (i) the non-resident has a residence or a place of business or business connection in India; or (ii) the non-resident has rendered services in India. If we examine the nature of services rendered by a marketing partner in terms of the agreement between the parties in light of above legal position, we are of the considered view that services rendered by M/s.SSG Technologies, LLC, definitely comes under 'FTS' as defined under Explanation-2 to Sec.9(1)(vii) of the Act, because, the scope of agreement ....