TaxTMI 
TaxTMI 
2016 (11) TMI 1765
X X X X Extracts X X X X
X X X X Extracts X X X X
....passed u/s. 143 r.w.s. 92 CA and 250 of the Income Tax Act. Since, the issue is common in the appeals and are heard together and for the purpose of convenience, we take up facts narrated in the Revenue appeal in ITA No. 651/2016 assessment year 2010-11. 2. The Revenue has raised the following grounds: 2.1 The Ld. CIT (A) erred in directing the AO to delete the addition of Rs. 92,17,894/- made u/s. 40(a)(i) of the I.T. Act. 2.2 The Ld. CIT (A) erred in holding that the services rendered by the foreign company to the assessee company cannot be held to be either 'managerial' or 'consultancy' or 'technical' within the meaning of sec. 9(1)(vii) r.w. Explanation thereto. 2.3 The Ld. CIT (A) ought to h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ASC Malaysia are not technical services or managerial or consultancy nature as defined in explanation 2, to section 9(1)(vii) of the Act and also as per the Article 12(3) of the DTAA between India and Malaysia. The assessee company emphasised that the services rendered by BASC are from Infrastructure located in Malaysia and the amount paid would not be taxable u/s. 9(1)(i) of the Act as income from the services are not accrued or arise in India. Further, the Ld. AR produced copy of agreement with details of consideration, training and services. The Ld. AO on perusal of agreement referred at page 5 to 7 of the order is of the opinion that the services are covered under provisions of sec. 9(1)(vii) of the Act and are in the nature of technica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp;92,17,984/- incurred by the assessee company in respect of shared service payments to BASC, Malaysia. As per the agreement, BASF India Ltd (BIL) has outsourced the entire payroll functions to BASC Malaysia relating to clerical activities and managerial position have been reorganised, further the BASC is engaged in the business of providing services relating to the Accounting, book keeping, payroll generation and payroll data managing and these service functions are not in the nature of technical services as per the DTAA between India and Malaysia. 5. Further, the BASC, Malaysia is not providing any technical services to the assessee, as per the explanations 2 to section 9(1)(vii) of the Act and services are in the nature of business....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the analysis on the Human Resource (HR) services and considered the facts and provisions and found that the assessee company is in the business of manufacture of catalyst and outsourced Accounts and HR services to its Associate BASC, Malaysia which are purely administrative services in nature and does not fit into FTS u/s. 9(1)(vii) of the Act. Further, the CIT (A) found that the services rendered are in the nature of Data entry operations and relied on High Court decisions and concluded that the services cannot be held as managerial or consultancy or technical under the provisions of section 9(1)(vii) and directed the Assessing Officer to amend the Assessment Order and delete the addition and allowed the appeal of the assessee. 7. Aggr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 7 and the Malaysia company purely relied on the terms of agreement in providing services and the provisions of section 40(a)(i) are not applicable. Further, the services provided does not fall within the Article 13 of DTAA and there is not Permanent Establishment (PE) of Malaysia company in India and filed paper book with details of services agreements, sample invoices and Journal vouchers and prayed for dismissal of Revenue appeal. 9. We heard the rival submissions perused the material on record and judicial decisions, the Ld. AR submitted that assessee company has entered into agreement with BASF-Asia Pacific Service Centre (BASC), Malaysia for providing the services of Financial and Accounting, Human Resource and such other services....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve been considered and the services being international transaction the DTAA agreement between India and Malaysia shall come into effect. In Article 13 of DTAA " fees for technical services for services being rendering of any managerial, technical or consultancy services and includes the provision of services for technical or other which does not include payment for services mentioned in Article 15 , 16 of the agreement. 11. The Malaysia Company (BASC) provides services under Article 13 r.w.s Article 5 and Article 7 of DTAA. The Article 5 deal with permanent establishment defined as the fixed place of business through which the business of enterprise is wholly or partly carried on. The facts are not disputed by the Revenue that there is ....