AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1106
X X X X Extracts X X X X
X X X X Extracts X X X X
.... company was in the nature of FTS and not royalty 3. Ld CIT(A) end in not appreciating the detail findings of the AO that as per me of agreement dated 11.0.2016 between the assessee and Oilstone Technology DMCC, UAE, the work of designing of tower, including designing of foundation and nature of tower constitutes nature of way and not FTS. 4. Whether on the facts and circumstances of a case and in law, the Ld CIT(A) has erred in law and on facts that payment made for the work of designing of tower, including designing of Foundation and structure of tower is clearly in me nature of royalty in view of Explanation-2 to Section 9(1)(vi) of the Income Tax Act, Article 12(3) of DTAA between India and UAE and as per Section 2(b) r.w.s. 13(5) of the Copyright Act, 1957. 5. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) has erred in law and on facts that the tower designs were used for earning of income from a source outside India, therefore, not liable to tax in India despite the fact that the assessee affirmed to have manufactured tower in India using the design provided by Oilstone Technology DMCC, UAE and then transported the same to Uganda to comple....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the brief facts the case are that the assessee is an Indian Company engaged in the business of Engineering, Procurement and Construction (EPC) Contracts relating to infrastructure facilities comprising high power transmission line, transmission and distribution, laying of electrification of railway lines, cross country laying of oil & gas pipelines etc. The major part of the assessee's revenue constitutes income from carrying out various projects relating to power transmission and distribution lines in various parts of the world. In one of the EPC Project executed by the assessee's Branch Office in Uganda, the assessee has made payment for services of towers design including designing of its foundation and structural drawing to Oilstone Technologies DMCC of UAE (Oilstone UAE) and no tax has been deducted at source on such payment by the assessee on the ground that such payment was not chargeable to tax in India. On verification of TDS deducted against foreign remittances u/s. 195 of the Act by the assessee during FY 2017-18, it was found by the TDS Officer that TDS was not deducted against certain payments made outside India and in this regard the assessee was asked to furnish 15CA....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Appeals) allowed the appeal of the assessee by observing that the EPC contract was awarded to Sino Hydro Corporation, China by the Uganda Government for the Karuma hydropower plant and its associated transmission lines. Sino Hydro Corporation, China subcontracted the work of design, manufacture, testing and installation etc. to consortium between the assessee company and Henan Electric Power and Supply and Design Institute, China wherein the assessee was required to erect a transmission line in Uganda. Under the sub-contract arrangement, the assessee was required to procure transmission towers from China, including designing of its foundation and structural drawing. For the purpose, the branch office of the assessee company situated at Uganda obtained services from Oil Stone Technologies, UAE. The assessee entered into service agreement with Oil Stone UAE for carrying out project specification study, preparation of tower designs, preparation of structural drawings of tower, preparation of tower test data documents etc. The Ld. CIT(Appeals) observed that there was no existing design of tower structure which was supplied to the assessee, but in the instant facts it is a case of actu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... accordingly, this further supports the fact that the services are not chargeable to tax in India as FTS. Accordingly, the counsel for the assessee submitted that Ld. CIT(Appeals) has correctly held in the instant set of facts that the assessee was not liable to deduct tax at source in respect of the aforesaid payments. 7. We have heard the rival contentions and perused the material on record. The first issue for consideration before us is whether in the instant set of facts, Ld. CIT(Appeals) has correctly held that payment for designing of towers made to Oilstone UAE was in the nature of FTS and not royalty. In our considered view, Ld. CIT(Appeals) has correctly held that this was a case where the payments were made to Oilstone UAE to carry out the services of project specification study, preparation of tower designs, preparation of structural drawings of tower, preparation of tower test data documents etc. and various other services as mentioned in the service agreement and therefore, qualify as FTS and are not Royalty payments. We observe that there was no existing tower structure design or data etc. which was supplied to the assessee by Oilstone Technologies UAE, but in the in....