2024 (12) TMI 35

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....siness of onsite services carried on by the assessee outside India would not be taxable in India and erred in holding that the case of the assessee is covered under exception u/s 9(1)(vii)(b) of the I.T. Act, and further, the Ld. CIT(A) also erred in not considering that the AO rightly made addition u/s 9(1)(vii) of the Act. 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 66, 92,85,679/-u/s 201(1) of the I.T. Act and interest of Rs. 68,67,79,540/- u/s 201(1A) of the IT. Act. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not considering the assessee's claims of exemption u/s 10A/10AA of the Income Tax Act, in ITR in respect of profit generated from export of computer software to clients located (refer to para 11.8(c), Page No.93 of AO order) in various jurisdictions as the income earned from export of software is exempt u/s 10A/10AA of the Income Tax Act clearly establishes that the source of income was in India & hence taxable u/s 9(1)(vii) as FTS. 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred is no....

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....ering services), infrastructure services and business processing outsourcing (BPO). The case of the assessee was taken up for verification on the basis of information received from systems for verification of Form 15CA/ 15CB with respect of various remittances made to different subsidiary companies in different countries without deduction of tax at source u/s 195 of the Act. Ultimately an assessment was framed u/s 201(1)/ 201(1A) of the Act for all the assessment years by the ld AO treating the assessee as "assessee in default‟ on the ground that the remittances made by the assessee to various subsidiary companies in different countries would be liable for deduction of tax at source in India. Since the said remittances were made without deduction of tax at source by the assessee, the AO treated the assessee as "assessee in default‟ and hence tax was sought to be collected from the assessee u/s 201(1) of the Act and consequentially interest u/s 201(1A) of the Act and accordingly orders u/s 201(1) / 201(1A) of the Act stood passed for each of the abovementioned assessment years in the name of the assessee company. 4. We find that the ld AO held originally that the remit....

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....ering services to the customers located outside India, billing is done on a consolidated basis on the customer by the Assessee (including the services rendered by the foreign AEs to the customer located outside India); payments are received by the Assessee from the customer located outside India and thereafter, revenue is shared by the Assessee with the foreign AEs for the proportionate volume of services rendered by the foreign AEs to the customer. (Para no.22, Page No.45) 3. The Hon'ble Tribunal further noted that the assessing officer erred in holding that the services were rendered by foreign AEs to the Assessee and the said findings of the AO are contrary to the binding directions of the DRP in para 3.7 of the order wherein DRP held that major part of module development and writing of codes on software application is carried out by the Assessee and only some of it is being done by foreign AEs; that both the Assessee and foreign AEs are working together on the server of the client to develop the final product. (Para no.23, Page No.45-46) Re: (II) Assessing officer erred in cherry-picking statements recorded of employees of the Assessee during survey proceedings 1. The....

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....39;ble Tribunal categorically held that agreements with customers were concluded outside India, services were rendered directly on the customer's server located outside India and payment was also received in foreign exchange from outside India; therefore, onsite software services represent a separate and independent function of the overall business of the Assessee. As a corollary, the payments received by the foreign AEs from the Assessee for performance of the above onsite services are essentially fees for services utilized for the purpose of earning income from a source outside India by the Assessee and thus, the receipts cannot be taxed in the hands of the foreign AEs in terms of second limb of exception under section 9(1)(vii)(b) of the Act. (Para no. 25-27, Page No.46- 50) Re: (IV) Taxability under the DTAAs - No findings returned 1. The Hon'ble Tribunal held that since receipts of the foreign AEs from the Assessee are held to be not taxable in India under the provisions of the Act, the grounds raised qua taxability of the impugned receipts under the DTAAs were rendered academic in nature, no findings were returned and the same were left open for determination. (Pa....