2024 (11) TMI 812

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....] u/s 143(3) of the Act on 04-12-2017. The grounds raised by the assessee read as under:- 1. The Order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in dismissing the appeal without giving sufficient opportunity of being heard to the appellant. 3. The Commissioner of Income tax (Appeals) erred in confirming the disallowance under section 40(a)(i) r.w.s. 195 and 9(i)(vii) of the Act 3.1 The Commissioner of Income tax (Appeals) erred in confirming the treatment of marketing fees paid to Natronix Singapore and SPEL America as 'fees for technical services'. 3.2 The Commissioner of Income t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ilable to SPEL India. 3.7 The Commissioner of Income tax (Appeals) ought to have noted that no technical knowledge or expertise has been made available to the assessee either by Natronix or SPEL America and hence the payment is not fee for technical services. 4. The appellant relies on decisions in CIT Vs. Faizan Shoes Pvt.Ltd. 367 ITR 0155 ; GE India Technology Cen (P) Ltd. Vs CIT 327 ITR 456 (SC) As is evident, the sole issue that arises for our consideration is disallowance made by Ld. AO u/s 40(a)(i) for want of TDS on certain payments. 2. The Ld. AR advanced arguments and filed written submissions. The Ld. Sr. DR also advanced arguments supporting the case of the revenue. Having heard rival submissions and upon ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..../s 40(a)(i) for want of TDS. 4. Payment to M/s SPEL America Inc. USA for Rs. 56.64 Lacs Similar payment was paid to US entity pursuant to Marketing Service Agreement dated 01-04-2009 which was extended on 01-04-2012. This entity was also free to develop and carry out marketing campaign for the assessee at its sole discretion. Taking the same view, Ld. AO made disallowance u/s 40(a)(i) for want of TDS. 5. The Ld. CIT(A) endorsed the stand of Ld. AO and held that payees had special expertise in the field of marketing / managerial services and rendering of such services was critical to the business of the assessee as carried out in India. Reliance was placed on the decision of Hon'ble High Court of Madras in the case of Regan Powertec....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ot be fees for included services under Article 12 of India USA DTAA due to similar 'make available' clause. Even otherwise this payment would fall under Article-7 as business profits. The Ld. AR has drawn our attention to the nature of services as contained in relevant clauses of the agreement which read as under: - Between Appellant and Natronix Semi Conductor Singapore "4. Service Strategy: N-sg shall develop and carryout suitable campaign as it deems necessary or advisable in its sole discretion. In this regard, N-sg shall be solely responsible to develop materials, develop demographic customer profiles, and coordinate all service efforts through all available channels. In addition to the foregoing, N-sg shall ....