TaxTMI 
TaxTMI 
2026 (6) TMI 1445
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....hri Kamal Sawhney, appearing on behalf of the assessee at the outset stated that the assessee does not wish to press ground no. 2 of appeal challenging validity of reassessment proceedings. In light of statement made by ld. Counsel for the assessee, ground no. 2 of appeal including its sub grounds i.e. 2.1 to 2.3 are dismissed as not pressed. 4. The ld. Counsel submits that the assessee is tax resident of Philippines. The assessee has entered into an arrangement with Bombardier Transportation India Ltd. (BTIN) for providing certain services viz. finance, accounting, procurement, treasury, to BTIN. The assessee received Rs. 2,32,36,611/- as consideration for rendering services to BTIN. The said receipts by the assessee can be classified as Fee for Technical Services (FTS) as per the provisions of the Income Tax Act. India- Philippines Double Tax Avoidance Agreement (DTAA) does not contain any provisions relating to FTS. In the absence of any specific Article on FTS the consideration received by the assessee is not taxable to India. The ld. Counsel submits that the Assessing Officer (AO) in draft assessment order without referring to any document merely on presumption held, "Durin....
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....isions of the Act. In support of his arguments, the ld. DR placed reliance on the decision in the case of DCIT vs. TVS Electronics Ltd., 22 taxmann.com 215 (Chennai). The ld. DR further contended that where payments are received for providing various specialized services for running operations in India, as is in the case of assessee, the said receipts are in the nature of FTS, hence, taxable in India under provisions of the Act. To support this proposition, the ld. DR placed reliance on the decision in the case of Volvo Information Technology AV vs. DCIT, 162 taxmann.com 679 (Delhi-Trib.). 7. Rebutting the submissions made by ld. DR, the ld. Counsel for the assessee pointed that the ratio laid down in the case of DCIT vs. TVS Electronics Ltd. (supra) has been reversed by Hon'ble Madras High Court in the case of Bangkok Glass Industry Co. Ltd. vs. ACIT (supra). The ld. DR referred to the decision of Coordinate Bench in the case of DCIT vs. Campus Eai India P. Ltd. in ITA No. 355/Del/2021 for AY 2017-18 decided on 20.10.2023 in support of his argument. 8. We have heard the submissions made by rival sides and have examined the orders of lower authorities. We have considered the ....
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....ic experience." 9. The ld. DR has emphasized that in the draft assessment order (page-9), the AO has observed that the assessee has furnished drawing, documents, method and other information. The payments for which would fall within the meaning of royalty. The relevant extract of AO's said observations have already been reproduced in para 4 of the order. We are unable to comprehend as to from where the AO has come to the conclusion that the assessee has furnished drawing, documents, method and such other information which is exclusive property of the assessee that have been shared by the assessee with BTIN. The AO while recording such findings has not even mentioned the source of such information available to the AO. In our considered view, the said observations of the AO are contrary to the material available on record. The Dispute Resolution Panel (DRP) has also given too much weightage to the said findings of the AO and based on said observation has come to the conclusion that the payments are in the nature of royalty. The nature of services provided by the assessee to its associates as per Agreement (supra) would show that they are in the nature of routine support services f....
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...., the entire payment has to be treated as falling for consideration between payment of royalty and payment of rendering technical advice. On going through arts. 2 and 3 of the agreement between the assessee and the Indian company, we agree with the view of the CIT(A) that the entirety of the payment cannot be considered as one falling for consideration under art. 12. Further, taking note of the fact that the assessee company was also involved in training Indian personnel in India and abroad and taking note of the clauses in the agreement as regards the payment and the additional payment depending on the period of training, over and above what was to be paid under the agreement for the duration specified therein, the CIT(A) rightly came to the conclusion that the component of technical services in India included the extra months of training, so too the training abroad. In computing the said amount, rightly the CIT(A) arrived at a finding that a sum of 1,12,500 USD and 69,750 USD would be the amount which would be treated as received for technical services rendered by the assessee and the amount of 4,79,640 USD relates to royalty payment, assessable as per art. 12. 19. Even ....
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....k to the AO for the verification and to decide the same in accordance with law. Thus, ground no. 5 of appeal is allowed for statistical purpose. 15. In ground no.6 of appeal, the assessee has assailed initiation of penalty u/s. 270A of the Act. Challenge to penalty proceedings at this stage is premature. Accordingly, ground no. 6 of appeal is dismissed. 16. In ground no. 7 of appeal, the assessee has assailed charging of interest u/s. 234A of the Act. The contention of the assessee is that the return of income was filed within the prescribed time limit as specified u/s. 139(1) of the Act. We deem it appropriate to restore this issue back to the AO for verification and decide the same, in accordance with law. 17. In the result, appeal of the assessee is partly allowed. ITA No.2015/Del/2025 18. This appeal by the assessee is directed against the assessment order passed u/s. 147 r.w.s. 144C(13) of (hereinafter referred to as 'the Act') dated 27.01.2025, for assessment year 2018-19. 19. The ld. Counsel for the assessee submits that facts germane to the issue in present appeal are similar to the facts in ITA 2014/Del/2025, except that in the present appeal, the assesse....