TaxTMI 
TaxTMI 
2025 (11) TMI 408
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.... (CPP India') as 'Fee for Technical Services' (FTS") under the Article 13 of the India- UK Double Tax Avoidance Agreement (DTAA') and hence liable to tax in India. 2. On facts and circumstances of the case and in law, the Ld. AO has erred in considering the sum of INR 89,41,248 earned by the Company for rendering non-IT support services to CPP India as FTS under the Article 13 of the India-UK DTAA and hence liable to tax in India. 3. Without prejudice, the Ld. AO has grossly erred in applying an incorrect tax rate of 15% under Article 13 of the India- UK DTAA, instead of the applicable beneficial tax rate of 10.92% under the Act for AY 2022-23, on the assessed income of the appellant, which also deviates from the draft assessment order issued by the Ld. AO. 4. Without prejudice, the Ld. AO has erred in not following the direction of the Hon'ble DRP and failing to grant credit of equalization levy paid @ 2% in the computation sheet issued along-with the final assessment order. 5. Without prejudice, the Ld. AO has erred in levying interest under section 234B of the Act in the computation sheet issued along-with the final assessm....
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....red certain non-IT based services in the area of human resources, finance, legal, compliance and secretarial services, internal audit etc. to CPP India. For rendering these services, the Company has earned INR 89,41,248 during the captioned year at a markup of 5% on cost incurred to render such services. iii. IT development services of development of new IT platform for CPP India: During the year, the assessee has provided IT development services to CPP India, for which it has earned INR 5,32,70,976. These services are rendered for the purposes of developing a dedicated IT platform for CPP India's local business of providing assistance services to customers in India. Through this, CPP India will have independent and appropriate IT infrastructure for its local business and at the same time, bringing operational efficiencies. 3.1 During the A.Y. 2022-23 the assessee company had received following amounts from CPP India towards IT Support services and IT support cost for Indian Project as given below:- Name of Revenue(3) (1) Amount of Revenue (2) Income offered to tax in India out of (2) Reasons for not offering income to tax(4) IT support services IN....
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....Del/2024 for Assessment Years 2018-19 and 2020-21, had deleted similar additions made by the AO. The relevant order dated 07.11.2024 for AY 2018-19 and 2020-21 of the Tribunal is reproduced as under:- "These appeals are preferred by the Revenue against the orders dated 12.02.2024 and 22.02.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred as Ld. First Appellate Authority or in short Ld. 'FAA') in Appeal Nos.NFAC/2017-18/10019957 and NFAC/2019-20/10181022 arising out of the appeal before it against the orders dated 05.05.2021 and 26.09.2022 passed u/s 143(3) r.w.s. 144B and u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), respectively, by the DCIT, Circle 4 (2), New Delhi (hereinafter referred to as the Ld. AO). 2. Heard and perused the record. 3. The ld. Sr. Counsel, Shri Ajay Vohra pointed out that the issues raised in the appeals of the Revenue have already been considered in AY 2017-18 by the coordinate Bench, vide ITA No.116/Del/2022, order dated 22.12.2022. The ld. DR could not dispute this submission. 4. After going through the impugned orders and the ground....
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....considered the agreement between CPP Group UK (supplier/UK) and CPP-assessee (Customer/India) dated 11.07.2017 in arriving at the above decision. We are conscious of the fact that the agreement dated 11.07.2017 is applicable for AY 2022-23 as per the copy of agreement filed by the assessee at page no.71 to 87 of the paper book. The Assessing Officer in para no.6.24 at page no.31 and 32 of its order has brought as according to the AO, the distinguishing facts of the case during the year from that of the Assessment Years 2017-18 and, therefore, according to the Assessing Officer, the said decision of the Tribunal for AY 2017-18 was not applicable in the present year. In this regard, the Assessing Officer recorded that the crucial fact of IT-development services was not present before Tribunal in AY 2017-18. Accordingly, the Assessing Officer stated that thus there was a change in facts in the present Assessment Year from the facts of the said assessment year i.e 2017-18. Further, the Assessing Officer observed that the Tribunal had held that because the service recipient CPP India doesn't become independently capable to perform the services and as these services are being provide....
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....rt Services include services pertaining to IT Helpdesk, Custody of data, data retrieval through MIS reports etc. Role of CPP in IT Development Services is that of developing in new IT platform to CPP India to comply with the regulatory requirement of housing business data within India 2. The old team of IT Support Services was there Entirely new IT team was hired by CPP India for participating in the development project and there was no overlap between employees between these two services. 4.4. In this regard, the relevant finding of the Ld. DRP as reproduced in the 4.3.5 of its directions are reproduced as under:- "4.3.5 In view of the above discussion, the Panel does not find any infirmity in the explanation put forth by the Ld. AR of the assessee. In view of the above, the Panel does not find any infirmity in the DAO and upholds the approach of the AO to tax the receipts from IT Support Service as FTS but at the same time but at the same time does not agree with the AO's finding that the IT Support Services and IT Development Services were similar in nature in light of the discussion in para 4.3.4. Hence, the Panel directs the AO to incorporate the fi....
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....ully perused. The Assessing Officer has detailed about the nature of service provided by the assessee company to CPP (India) in para no.7.1 and page nos.36 to 38 of his order. The assessee explained about the services in para no.7 of the order, which is reproduced as under:- "7. With regard to the non-IT services being provided by the assessee CPP GSL to its AE the submission of the assessee are as follows: Taxability of non-IT services At the outset, the assessee wishes to briefly reiterate the background of the non-IT services rendered by it during the captioned year. These non-IT based services were in the area of human resources, finance, legal, compliance and secretarial services, internal audit etc. and were rendered to the group entities, including CPP India. It is also submitted to your goodself that these services are not highly professional but routine services that are rendered at a group level and are fundamental to the working of a multi- national group. This ensures seamless coordination, resource optimization, oversight and standardization of processes, enabling the organization to leverage economies of scale and maintain consistency in ope....
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....ated in the course of its business and for other reasons as stated in the para observed that the onus to prove that the revenue received by the assessee is not in the form of FTS which 'makes available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design' is on the assessee itself which it has failed to prove so. 4.10. Further, the Assessing Officer in para 7.6 has given the reasoning as to how the services provided by the assessee under this head also mentions to 'make available' to the assessee and the relevant finding is reproduced as under:- "7.6. It is observed that the services provided by the assessee is on a long term basis to the Indian AE and in all these broad categories of services they will require services from the assessee company. It is clear that Indian entities will be receiving Emails/instructions from the assessee to carry out implementation of the services in their Indian business. Even if technical personnel of the assessee may not be visiting India generally but the quantum of these services are huge, which shows that the Indian entity through their India....
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.... seeks professional service from any professional for fund management/portfolio management would amount to that person making available professional knowledge to the said person. The ld. Dispute Resolution Panel observed that apparently, there was no transfer of any technical knowledge, experience, skill, knowhow or process that would enable the AE to use them. In view of these discussions, the ld. Dispute Resolution Panel held that the Panel is of the opinion that the receipts for Non- IT Services cannot be construed as FTS specially in the absence of evidence the AO seeks to rely upon, in respect of training, vision document etc. However, the ld. Dispute Resolution Panel noting that the Assessing Officer had not examined the full facts in this case directed the Assessing Officer to verify the facts with a direction to delete the said addition if not found to be backed by the facts. 4.15. The Assessing Officer re-verified the facts as per the discussion in para no.15.3 to 15.5 on page no.79 to 83 of his order and inter-alia observed that as per the agreement, the services rendered were in nature of consultancy and guidance to the employees of the AE and this guidance and consul....