2026 (4) TMI 122

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....is, whether the payments made by the assessee to two Singapore based entities towards consultancy and architectural and structural design are in the nature of Fees for Technical Services (FTS) u/s. 91(vii) of the Act read with Article 12(4) of the India-Singapore Double Taxation Avoidance Agreement (DTAA) and whether the alleged failure on the part of the assessee to deduct tax u/s. 195 of the Act, while making such payment, would entail disallowance u/s. 40(a)(i) of the Act. 3. Brief facts relating to this issue are, the assessee is a resident corporate entity stated to be engaged in the business of development of real estate. In the financial year 2014-15 corresponding to assessment year 2015-16, the assessee had undertaken a project o....

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....the services rendered fall within any of the aforesaid three categories, still the payment made cannot be regarded as FTS as in course of rendition of such services, the payees have not made availably any technical knowledge, knowhow skills, etc. to the assessee, thereby, enabling the assessee to use such technical knowhow knowledge, skill, etc. independently without the aid and assistance of the service providers. The assessee further submitted that the consultancy services relating to architectural design and drawing are project specific and will not be of any use once the project is complete as they cannot be used for any other project. 5. The Assessing Officer however, did not find the explanation furnished by the assessee acceptable....

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....e decision of the coordinate bench in assessee's case in A.Y. 2015-16. In this context, he placed a copy of the order dated 04.10.2021 passed in ITA No. 5804/Mum/2018. The learned Departmental Representative could not controvert the aforesaid submission made by learned Counsel for the assessee. However, he relied upon the observations of the Assessing Officer. 8. We have considered rival submissions and perused the materials available on record. Undisputedly, in the preceding assessment year, the assessee had undertaken development of the residential project viz. Serendipty. Facts on record reveal that construction of the project started in F.Y. 2014-15 and continued in subsequent years. For developing the project, the assessee has avail....

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....hether the payment made by the non-resident entities can be termed as FTS under Article 12(4) of India Singapore Tax Treaty. For better appreciation, Article 12(4) of the tax treaty is reproduced hereunder:- "4. "The term fees for technical services as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services: (a) are ancillary......... (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein ; or (c) consist of the development and transfer o....

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.... various types of drawings and designs for the residential project being developed at BKC. On further verification of facts on record, it is evident that insofar as Arc Studio Architecture + Urbanism Pte Ltd is concerned, it will provide an illustrative site/roof plan showing all the components of the project, general landscape, recommendation and overall infrastructure elements, such as, entry driveways and service circulation, Diagram showing each of the major public at 1:200 scale, image board to describe the architectural character of the project etc. The scope of work also requires the entity to prepare schematic design drawings, approved by the client, in case of minor adjustment. The terms of the agreement make it clear that the desi....