TaxTMI 
TaxTMI 
2023 (7) TMI 553
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...."On the facts and in the circumstances of the case and in law, the Hon'ble DRP and consequentially the learned AO have: 1. Erred in addition on account of non-deduction of TDS as mentioned below: The Learned AO has erred in disallowing the expenditure of INR 17,13,981 incurred by the Appellant towards supervision installation and commissioning services provided by its vendor Compagnie Belge De Ventilateurs S.A. (CBV) (sub-contractor from Belgium) under section 40(a)(ia) of the Act on account of not deducting taxes at source, treating the same as fees for technical services under Article 12 of India-Belgium Double Taxation Avoidance Agreement (DTAA). 2. Erred in levying penalty on the above erroneous addition: The learned AO has ....
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.... (sub-contractor, Belgium) without deducting of TDS. The A.O was of the view that since the payment was in the nature of fees for technical service and services were provided in India, therefore, the TDS required to be deducted. On query, assessee explained that services were availed due to expertise of CBV in commissioning and installation of dryer fans. As per DTAA between India-Belgium, the scope of tax, FTS was limited, therefore, no TDS was deducted and CBV had requested for non-deduction of tax. It was further submitted that services were not make available in India as the activities/services performed by CBV did not impart or transfer any knowledge, knowhow, skill to the recipient of services. However, AO has not accepted the submis....
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.... appellate proceedings before us the ld. Counsel contended that activity/services performed by CBV did not impart or transfer any technical knowledge/knowhow skills to the services recipient. He further submitted that providing all these services did not enable the service recipient to undertake the said services in its own capacity in future. The ld. Counsel further submitted that CBV is a tax recipient of Belgium and is eligible for access the India-Belgium Tax Treaty. As per protocol of the India-Belgium Tax Treaty, India would limit its taxation on royalties or fees for technical services if under any scope convention or agreement between India and a third state being a member of the OECD, India limits its taxation or royalties or fee f....
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....ucts AB Vs. DCIT (2021) 187 ITD 419 (Mumbai ITAT) 7. Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above the assessee submitted before the A.O & DRP copies of invoices of CBV with description of service placed at page no. 27 to 31 of the paper book and after referring the various details submitted that there was no transfer of technical knowledge. knowhow, experience skill or process from the services provided by CBV. It was also submitted that because of applicability of MFN clause Fees for Technical Services (FTS) mentioned in the Double Taxation Agreement between India and Belgium no tax at source to be deducted after taking into consideration the DTAA between India & Portugal. Howe....
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....onsidered prospective unless the legislative intent is clearly to give it a retrospective effect. We are confronted with a circular, much less an amendment to the enactment, which attaches a new disability of a separate notification for importing the benefits of an Agreement with the second State into the treaty with first State Obviously, such a Circular cannot operate retrospectively to the transactions taking place in any period anterior to its issuance. In view of the foregoing discussion, we are satisfied that the requirement of a separate notification for implementing the MFN clause, as per the recent CBDT circular dt 03-02-2022 cannot be invoked for the year under consideration, which is much prior to the CBDT circular of the year 20....