TaxTMI 
TaxTMI 
2023 (3) TMI 1024
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....ade to parent company as fees for technical services and thereby disallowing such expenses u/s. 40(a)(1) of the Act for non- deduction of tax at source. 2. In the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO in not allowing benefit of Indo- UAE DTAA. 3. The Ld. CIT(A) erred in upholding the levy of interest u/s. 234B and 234C of the Act. 4. The Ld. CIT(A) erred in not setting aside the action of the Ld. AO in initiating penalty proceedings u/s. 271(1)(c) of the Act." 2. Brief facts of the case are that the assessee is a company in the business of magazine publishing and event management. The return of income was filed on 29-11-2013 declaring NIL income under the normal provisions of the act and Rs. 61, 91,743/- as book profit u/s.. 115JB of the act. Case was selected under CASS and was assessed u/s. 143(3) during the assessment proceedings AO made disallowance u/s. 40(a)(ib) of the act amounting to Rs. 1,65,31,810/- and disallowed Rs. 20,63,697/- as disallowance of provisions under the normal provisions of the act. Whereas added back disallowance of provisions amounting to Rs 20,63,697 t....
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....eport made by ITP BVI for Board of Directors of the appellant company is clearly in the nature of advice or consultation given to the appellant for the purpose of appellant's business Human resource services These services provided by the HR team provides vacancy form approval for new replacement roles, occasional recruitment advertising, screening of applications, provision of contract of employment and associated a paperwork, occasional flight booking for new starters, provision of contractual information for new starters to finance, and annual/other leave record keeping on CRM, leaving entry onto CRM Visa provision for visitors to Dubai from Mumbai office, HR advice regarding employment relations issues HR services provided by the ITP BVI for effectively managing the leaves, employees, contracts, it visas and other human resource aspects of the business of the appellant. These are managerial services for running and managing the business of the appellant Information Technology services; These services include IT infrastructure provisioning and support services, CRM and a Navigation software supporting their business processes, custom application developm....
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.... Parties in seeking a practical basis on which to charge have concluded that the RECIPIEN T's budgeted full time headcount is the most sound Indicator of volume of services consumed under this agreement from time to time bearing a solid correlation to the size and growth of the business and therefore the resource demanded. 5.2 Invoicing process With the objective to simplify as much as possible the invoicing process as well as to reduce administrative costs, the Parties hereto have agreed the following: 5.2.1 ITP GROUP shall invoice for its services on a monthly basis or on another agreed upon basis. ITP GROUP's invoices shall be sent to the RECIPIENT monthly. 5.2.2 Invoicing by ITP GROUP to RECIPIENT shall be made in US Dollars on the basis of the actual Chargeable Costs for the Fiscal Year for the first ten months and on estimated cost method for the next two months if needed. Article 6-METHOD OF ALLOCATIONO RECIPIENT considers that ITP GROUPS services are essential and beneficial to their activities. 6.2 The ITP GROUP will be allocating the expenses on the basis of budgeted headcount in all the services with ....
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....come as defined in sec 5 and 9, transaction falls.It is further observed that being an international transaction no reference to TPO (transfer pricing officer) was made this fact further strengthens the contention of the assessee that transaction under consideration did not have any element of mark-up/profits. Sec. 195 relating to TDS for the payments outside India applicable only in the cases where an element of income is involved. This essential element of income to the parent company is not establish by the AO while applying sec. 195 and sec 40(a)(ib). it is further observed that revenue is not able to establish any element of income involved in this transaction of reimbursement by assessee to the parent company. We have gone through the case laws relied upon by the revenue and assessee both and we found that the judicial pronouncement relied upon by the assessee are relevant and applicable to the facts of the case and we concur with those judicial pronouncement of honourable apex court ,high court and benches of ITAT as under: • CIT Vs Kotak Securities Ltd (2016) 239 taxman 139 (S.C) • CIT Vs Bharti Cellular Ltd (2011) 330 ITR 239 (S.C) • ....
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....ncome of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. This Explanation makes it prominent that only that part of the income from business operations can be said to be accruing or arising in India, as is relatable to the carrying on of operations in India. In other words, if a non-resident earns any income from India by means of operations carried on outside India, that will not fall within the scope of section 9(1)(i). Even Explanation below section 9(2), as relied on by the revenue, requiring inclusion of income in the total income of the non-resident whether or not the non-resident has a residence or place of business or business-connection in India or the non-resident has rendered services in India, is applicable only in respect of clauses (v) to (vii). Clause (i) of section 9 has not been included by the legislature within the ambit of this Explanation. It shows that unless a non-resident earns income from business operations carried out in India, such income cannot be deemed as accruing or arising in India. Reverting to the facts of the instant case,....