Income Tax Appellate Tribunal - Chennai
Regen Powertech Private Limited, ... vs Dcit International Taxation 2(1), ... on 28 February, 2019
आयकर अपीलीय अिधकरण, 'बी' ाय पीठ, चे ई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'B' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, ाियक सद एवं ी ए.सजयरामन, लेखा सद के सम$
BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER
AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER
आयकरअपीलसं/I.T.A. No.2721/Chny/2017
िनधा(रणवष( /Assessment Year : 2014-15
M/s. Regen Powertech Pvt.Ltd., Vs The Deputy Commissioner of
7th floor, KRM Plaza, North Tower, Income Tax,
No.2, Harrington Road, Chetpet International Taxation-2(1),
Chennai-600 031. Chennai.
PAN: AADR5531M
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओरसे/ Appellant by : Mr.B.Ramakrishnan, CA
यथ क ओरसे/Respondent by : Mr.Homi Rajvansh, CIT
सुनवाई क तार ख/Dat e o f he ar ing : 20.12.2018
घोषणा क तार ख /D at e o f Pr ono unc e m en t : 28.02.2019
आदे श/O R D E R
Per S.JAYARAMAN, AM:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-16, Chennai in ITA No. 60/CIT(A) -16/2016-17 dated 01.08.2017 for assessment year 2014-15.
2. M/s. Regen Powertech Private Limited, the assessee, is engaged in the business of manufacture and supply of Renewable Energy Devices viz. Wind Turbine Generators ("WTG"). For ay 2014-15, the DCIT, International Taxation 2 (1), Chennai, after :-2-:
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considering the assesseee's explanations and other material held that the assessee's claim of; reimbursement of Rs.1,19,47,013/- to M/s Windforce Private Limited, Srilanka for installation of WTG at the premises of Srilankaas fee for technical services / royalty, consultancy charges of Rs.12,01,000/- paid to M/s Ernst & Young URE for market study as royalty and the payments of Rs.5,23,545/- made for purchase of software from M/s EMD International as royalty. Since the assessee has not deducted TDS on these payments, he has passed an order u/s 201(1) / 201(1A). Aggrieved, the assessee filed an appeal and the Ld.CIT(A) dismissed the appeal. Against the order of the Ld.CIT(A), the assessee filed this appeal.
3. The Ld AR submitted that the assessee sells its WEG to customers in India and also outside India. For the WEG sold outside India,it engaged the companies resident in the respective countries for providing the erection and commissioning services and subsequent repair services to the customers in those countries.During the assessmentyear it paid, Rs.1,19,47,013/- to M/s Windforce Private Limited, Srilanka for erection and commission services rendered to its customers outside India and :-3-:
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Rs.3,34,414/- to M/s Wingtec Rotor Service, Germany for repair services rendered to its customers outside India. The Assessing officer held that the above services require technical skills and expertise and hence they are taxable under section 9(1)(vii) .Further, the AO held that as per the provisions of Double Taxation Avoidance Agreement with Germany and Srilanka, the Fee for Technical Services payable to anon-resident is taxable in India at 10%. In this regard, the Ld AR submitted that as per the provisions of section 9(1)(vii) (b) of the Act, "the income by way of fees for technical services payable by a person who is a resident, except where the fees are payable in respect of servicesutilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India " shall be deemed to accrue or arise in India. Since the above mentioned services are provided at the customer premises outsideIndia, they relate to business of the assessee outside India. Hence, these payments under the category of FTS is not taxable in India.In this regard, reliance was placed on the decision of CIT V. Faizan Shoes (P.) Ltd [2014] 48 taxmann.com 48 (Madras). It was also pleaded that ever assuming that these payments are related to the business income of the foreign :-4-:ITA No.2721/Chny/2017
companies, as per the Article 7 of the DTAA with Srilanka and with Germany, read with section 90 of the Act, the taxability of business profits is as under:
"The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through apermanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment."
3.1 In the assessee's case, neither the Srilankan nor the German entity to whom the impugned paymentsare made, has any Permanent Establishment in India. Hence, these payments being the business income of the foreign companies are not taxable in India.In this regard, reliance was placed in the case of DCIT V. SRM Agro Foods in [2016] 75 taxmann.com 210 (Mumbai - Trib.), wherein it was held that "Where assessee hadmade payment to non-resident agent for rendering services outside India and saidagent did not have any PE in India, said payment was not exigible to TDS deduction under section 195"
3.2 The Ld AR further submitted that since the above payments are not subject to tax in India, they are not liable to suffer TDS as :-5-:ITA No.2721/Chny/2017
held by the Hon'ble Supreme Court in the case of GE India Technology Cen.(P.) Ltd. V. CIT in [2010] 193 TAXMAN 234 (SC) and hence pleaded todirect the A O not to treat the assessee in default u/s 201/201(1A) of the Act and delete the taxes and the interest levied u/s 201(1A) on these payments.
4. Per contra, the Ld DR invited our attention to the order of the Ld.CIT(A) and supported it. The relevant portion is extracted as under :
"The nature of work mentioned as per the work order in respect of WFPL mentions that "WFPL shall provide one no Liebherr LR 1350 serial no 074073 (350t capacity) crawler crane with 96 meter main boom and 12 meters fixed jib in a good working condition and load handling capacity as per the load chart of the crane at kalpitiya sites for erection and de-erection of WIGs belonging to REGEN."
Windforce shall give or provide all necessary superintendence during the execution of the works. WindforcePvt. Ltd. shall provide and employ personnel on the site in connection with the execution of the works. Only such technical assistants as are skilled and experienced in their respective callings as area competent to give proper supervision to the work they are required to supervise such skilled, semi-skilled and unskilled labour as in necessary for the proper and timely execution and maintenance of works. Where required by law or regulation of local or other authority, such personnel shall be duly licenses by the competent authority to practice their trades, professions and callings. The appellant has exported Wind turbine generators to its customers in Srilanka. The turbine generators are manufactured / supplied from India. The situs/ source of income generating activity i.e WTG supplied towards which the payment under consideration is made, is therefore in India. There is no business or profession carried out by Regen Power tech Pvt. Ltd. outside India in Srilanka. Regen Power tech is one of the largest manufacturers of multi megawatt direct drive (gearless) WECs with permanent magnet technology in Indian market and provides full turnkey installations for wind power projects. The :-6-:
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website of the appellant states that the WECs are manufactured at Tada, Andhrapradesh or from Udaipur. Hence, it is clear that the business of manufacturing turbines is undertaken in India where it has around 2000 employees spread across its various offices in India. Hence an order of installing turbine outside India, cannot be considered as a business or profession done by Regen outside India. The materials (turbine) involved in that business are not procured from outside India. Hence the appellant's contention that execution of works in Srilanka are business carried out entirely outside India is not found acceptable.
The appellant's contention that the nature of payment made to WFPL, Srilanka is not in the nature of Fees for technical Service' as per the explanation (2] to Section 9(i)(vii) of the Income, tax Act.
Thus the appellant claims that as the Income is not in the nature of FTS. it must be treated as business Income in the hands of WFPL,, Srilanka. As per Article 7 of India-Srilanka DTAA, Business profits of an enterprise of Srilanka must be taxable only in Srilanka unless the enterprise carries on business in India through Permanent Establishment. However Explanation [2] of Section 9(i)(vii) states that-For the purposes of this clause, '"fees for technical services" means any consideration (including any lump sum consideration or rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of recipient chargeable under the head '"Salaries".] The appellant's contention that the project undertaken in Srilanka is mere construction and hence does not qualify as Fee for Technical Service. In the Work Order issued by Regen PowertechPvt. Ltd. to M/s Windforcepvt. ltd., the scope of the work is mentioned as '"WFPL to operate the crane under supervision and control of REGEN. The work assigned is mentioned as "Loading and Unloading of our WEC components at REGEN, WEC locations, De-Erection and Erection of foundation cans, steel towers, Nacelle, Generator, Rotor, Blades and other supporting components of WEC at REGEN sites. Dismantling, assembly, loading and unloading of crane and crane parts at REGEN site." In the conditions of contract, Clause 3.0 states that Windforce Pvt Ltd shall give or provide all necessary superintendence during the .execution of the Works and as long thereafter as the Site Engineer may consider necessary for the :-7-:ITA No.2721/Chny/2017
proper fulfilling of the obligations under the contract. Windforce Put Ltd shall arrange a competent and authorized agent or representative to be constantly on the works who shall give his whole time to the superintendence of the same. clause 4.0 says that Windforce Put Ltd shall provide and employ personnel on the site in connection with the execution of works, Only such technical assistants as are skilled and experienced in their respective callings as area competent to give proper supervision to the work they are required to supervise and Such skilled, semi-skilled and unskilled labour as is necessary for the proper and timely execution and maintenance of the works. Where required by law or regulation of local or other authority, such personnel shall be duly licenses by the competent authority to practice their trades, professions and callings. From the description of work order and above clauses in the agreement, it is evident that the work being carried out in Srilanka is not mere construction assembly or mining like project. Installation of wind turbine requires lot of technicality. Wind Force PVT Ltd hence provide for skilled technical assistants and site engineers for executing the installation work. The services of technical personnel are used in the Installation of Wind turbines and hence the services rendered by Wind Force Pvt. Ltd. to Regen Power tech for its projects in Srilanka are in the nature of Fee for Technical Services. Moreover as per Article 12 of India-Srilanka DTAA, Royalty of Fee for technical services may also be taxed in the contracting State in which they arise, according to the laws of that State1 but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical services.
In the appellant' s case, the Services are rendered by Wind Force Pvt. Ltd. to the appellant who is based in India. Hence as per clause (2) of Article 12 of DTAA, the payments made towards the services rendered by WFPL, Srilanka are liable to withholding tax at 10%, as against non-deduction of TDS on such payments by appellant.
In view of the above discussion case laws referred are found distinguishable on facts therefore without prejudice to the above, the payments of Rs.1,19,47,013/- paid to M/s Windforce Private Limited, Srilanka for erection and commission services rendered to customers outside India are also in the nature of Royalty as it involves the payment for the right to use industrial, :-8-:ITA No.2721/Chny/2017
commercial, or scientific equipment, as the present payment is towards hiring of cranes and hence in the nature of right to use Industrial, Therefore I upheld the action of the AO to treat the payment Rs.l,19,47,013/- paid to M/s Windforce Private. Limited, Srilanka for erection and commission services rendered to customers outside India as FTS or Royalty liable to 10% TDS and as appellant has failed to do so, hence appellant is in default in view of sec 201(1) of the Act and therefore the AO has rightly levied tax and interest u/s 20 1(1) & u/s 201(1A) of the Act. The ground of appeal is therefore dismissed. As regard the REPAIR SERVICE, the appellant has engaged M/s. Wingtec rotor service, Germany for carrying out repair on the rotor blades by deploying its service technicians and had incurred an amount of Rs.3,34,414 towards the same and appellant has not deducted IDS on the said payment for the reason that the nature of remittance is towards repair charges, the repairs are most typical features like cracking and roughness on the surface of the blades, electric short circuit in the generator arid overheating of the gearbox all demand a sophisticated approach to maintenance. Hence these repairs are not mundane repairs, but require highly sophisticated techniques and hence in the nature of Technical Services as per section 9(l)(vii) r.w. Explanation 2 of IT Act 1961. As the payments for repair service were made to Non Resident of Germany during the F.Y. 2013-14, the taxability as per DTHA with Germany. Article 12 Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the other State. However, such royalties and fees for technical services may also be taxed in the contracting State in which they arise and according to the laws of that state, but if the recipient is the beneficial owner of the royalties, or fees for technical services, the tax so charged shall or exceed 10 per cent of the gross amount of the royalties or fees for technical services. The terms "fees for technical services" as under in this Article means payments of arty amount, in consideration for the services of a managerial, technical or consultancy nature, including the provisions of services of technical or other personnel.
Hence an amount of Rs.3,34,414/- paid to M/s. Wingtec Rotor Service, being in the nature of FTS is rightly treated as income chargeable to tax in India and hence liable to TDS. In view of the above discussion I upheld the action of the AO to treat the payment Rs. 3,34,414/- paid to M/s Wingtec Rotor Service, Srilanka for repair services rendered to customers outside India as FTS liable to 10% TDS and as appellant has failed to do so, :-9-:ITA No.2721/Chny/2017
hence appellant is in default in view of sec 201(1) of the Act and therefore the AO has rightly levied tax and interest u/s 201(1) & u/s 201(1A) of the Act. The ground of appeal is therefore dismissed."
5. We have heard the rival submissions and gone through relevant material. The AO recorded a finding that Regen Power tech Pvt Ltd , the assessee, is one of the largest manufacturers of multi megawatt direct drive (gearless) WECs with permanent magnet technology in Indian market and provides full turnkey installations for wind power projects. It has exported Wind turbine generators to its customers in Srilanka. The turbine generators are manufactured / supplied from India. The situs/ source of income generating activity i.e WTG supplied towards which the payment under consideration is made, is therefore in India. There is no business or profession carried out by Regen Power tech Pvt. Ltd. outside India in Srilanka. Hence, it is clear that the business of manufacturing turbines is undertaken in India.Hence, an order of installing turbine outside India, cannot be considered as a business or profession done by Regen outside India. The materials (turbine)involved in that business are not procured from outside India. Hence, the A O held that the assessee's contention that execution of works in Srilanka are not the business carried out entirely outside India. After examination of the agreements, Article :-10-:
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12 of India-Srilanka DTAA, Article 12 of India-Germany , the Ld CIT(A) has after distinguishing the case laws relied on by the assessee, inter alia, held , supra, that the services of technical personnel are used in the Installation of Wind turbines and hence the services rendered by Wind Force Pvt. Ltd. to Regen Power tech for its projects in Srilanka are in the nature of Fee for Technical Services and the payments made to M/s Windforce Private Limited, Srilanka for erection and commission services rendered to customers outside India are also in the nature of Royalty as it involves the payment for the right to use industrial, commercial, or scientific equipment, as the present payment is towards hiring of cranes and hence in the nature of right to use Industrial and as per clause (2) of Article 12 of DTAA, the payments made towards the services rendered by WFPL, Srilanka are liable to withholding tax at 10%. Similarly, on the payments made for repair service to Non Resident of Germany, the Ld CIT(A), inter alia, held, supra, that it is in the nature of FTS, rightly treated as income chargeable to tax in India and hence liable to TDS. Therefore, the AO has rightly levied tax and interest u/s 201(1) & u/s 201(1A) of the Act. Since the assessee provided full turnkey installations for wind power projects for the customers :-11-:ITA No.2721/Chny/2017
outside India and thus the assessee has fulfilled /rendered its turnkey projects outside India by availing the impugned services.
Therefore, its business is not carried out entirely outside India. In the facts and circumstances, we do not find any reason to interfere with the order of the ld CIT(A).The corresponding grounds of the assessee are dismissed.
6. The next issue is that the assessee had purchased software called 'windpro' from EMD International A/s, Denmark for Rs.5,23,545/-. The Assessing Officer held that the payment made for purchase of software amounts to royalty as per explanation 4 to section 9(1)(vi) of the Act and as per Article 13(3) of the Indo- Denmak DTAA r.w.s 90 of the Act, it is liable to tax in India. Since the assessee failed to deduct tax on the remittances made towards purchase of software u/s 201(1) and 201(1A) , the AO held that the assessee is liable to pay the tax and interest thereon and levied accordingly. On appeal , the Ld CIT(A) dismissed the appeal.
6.1 In this regard, the Ld AR submitted that the explanation 4 to section 9(1)(vi) was introduced in Finance Act, 2012 with retrospective effect from 01-06-1976 to include payments made for :-12-:
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rights to use a software within the meaning of Royalty.However, the term 'royalty' as per Indo-Denmark DTAA was not amended to include payments made for rights to use a software, which is read as under:
Article 13
----------------
(3) The term 'royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinema to graph film or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience."Since as per the provisions of Indo-Denmark DTAA purchase of packaged software isoutside the definition or scope of Royalty or FTS, the provisions of DTAA, being morebeneficial prevails over the provisions of the Act as held in the decision of the Apex Court in the case of Union of India v. Azadi Bachao Andolan (2003) 263 ITR 705/132 Taxman 373. Further, he relied on the following cases,wherein it was held that the amendedprovisions of the domestic law cannot be read into the DTAA:
1. ADIT V. First Advantage (P.) Ltd [2017] 77 taxmann.com 195 (Mumbai - Trib.)
2. Dy. DIT (IT) v. Reliance Industries Ltd. [2016] 159 ITD 208/69 taxmann.com 311(Mum. - Trib.)
3.Capgemini Business Services (India) Ltd. v. Asstt. CIT 120161 158 ITD 1/68 taxmann.com 36 (Mum.- Tub.)
4. Financial Software & Systems (P.) Ltd. Vs. DCIT / ACIT Company Circle 11(1), Chennai [2014] 47 taxmann.com 410 6.2 Further, the Ld AR submitted that in the case of Financial Software & Systems (P.) Ltd. Vs. DCIT / ACIT Company Circle 11(1), Chennai [2014] 47 taxmann.com 410 wherein in para 54, this Tribunal has held as under:
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"Anyhow, even if the amendment brought in sec. 9(1)(vi) by Finance Act, 2012, is consideredas a milestone, the judgment rendered by the Hon'ble Delhi High Court in the case of Infrasoft Ltd. (supra,), really supports the argument of the assessee. In the said decision, evenafter the amendment, the Hon'ble Delhi High Court has held that the amount received by theassessee from a non-resident company for granting license to use copyright software to itsown business purposes could not be brought to tax as Royalty under Article 12(3) of Indo-US DTAA."
and the Mumbai Tribunal decision in the case of Deputy Director of lncome-tax (IT)2(1) Vs. Works Corpn (2012) 18 taxmann.com 189 (Mum) wherein it is held that when shrink wrap software is sold, the consideration is paid for right to use software and such consideration is not royalty. Therefore, the Ld.AR prayed that the assessing officer may be directed not to treat the assessee in default u/s 201/201(1A) and delete the taxes and interest levied u/s 201 (1A). Per Contra, the Ld DR supported the orders of the Lower authorities.
7. We have heard the rival submissions, gone through relevant material and find force in the Ld.AR 's submissions, supra. We hold :-14-:
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that the impugned consideration is paid for the purchase of software, it is paid for right to use software and hence such consideration is not royalty. Therefore, we direct the A.O not to treat the assessee in default u/s 201/201(1A) and delete the taxes and interest levied u/s 201 (1A) on this issue. The corresponding grounds of the assessee are allowed.
8. The next issue is that the assessee had made remittance of Rs.12,01,000/- to M/s Ernst and Young, UAE in connection with a market study for Wind Energy rendered by Ernst and Young in UAE.No TDS was deducted. The Assessing Officer held that the said market study is in the nature of information concerning commercial experience and hence the same amounts to 'Royalty' under lndo-UAE DTAA. Since the assessee failed to deduct tax on the remittances, the AO held that the assessee is liable to pay the tax and interest thereon u/s 201/201(1A) and levied accordingly. On appeal, the Ld.CIT(A) dismissed the appeal. 8.1 In this regard, the Ld AR submitted that the market survey was done in UAE for earning the income in relation to sale in UAE, which amounts to business connection outside India. Hence, as :-15-:
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per the provisions of section 9(1)(vii)(b) of the Act, which is read as under:
"9. (1) The following incomes shall be deemed to accrue or arise in India:
(vii) income by way of fees for technical services payable by--
-------
(b) a person who is a resident, except where the fees are payable in respect of servicesin a business or profession carried on by such person outside India or for theof making or earning any income from any source outside India; or..."
Therefore, the remittances made to Ernst & Young UAE is not taxable in India. In this regard, the Ld AR relied on the decision of Kotak Mahindra Bank Ltd. V. ITO in [2016] 74246 (Mumbai - Trib.) Since the said payments are not subject to tax in India, it is not liable to TDS as held by the Hon'ble Supreme Court in the case of GE India Technology Cen. (P.) Ltd. V. CIT in [2010] 193 TAXMAN 234 (SC)and hence prayed that the AO may be directed not to treat the assessee in default and delete the taxes and interest levied pray that your authority may direct the assessing officer not to treat the assessee in default u/s 201/201(1A) of the Act and delete the taxes and interest levied u/s 201(1A).
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8.2 Per contra, the Ld DR invited our attention to the order of the Ld CIT(A) and supported it. The relevantportion is extracted as under :
"I have carefully considered the appellant's submission on FEE FOR PROFESSIONAL SERVICES. The appellant has made a remittance of Rs.12,O1,000 to M/s. Ernst & young, UAE in connection with a market study for Wind Energy rendered by E&Y and appellant had not deducted TDS on the same for the reason that "Consultancy services and not FTS as per India UAE treaty, no make available of technical knowledge, it is just a market study report. Applying article 5/7/14 of DTAA with UAE it has been concluded as business profits and taxable in the receiving end and hence no TDS has been deducted on this. Services rendered outside India and hence not taxable. They don't have PE in India.
In this regard, it would be pertinent to quote definition of market study as per Wikipedia "market -- research provides important information to identify and analyse the market need, market size and competition. The factors that are investigated thro' market research include market information/ segmentation/ trends & SWOT analysis."
TAXABILITY AS PER INCOME TAX ACT:
Section 9 (1)(vii) of the Act reads as under:
9. (1) The following incomes shall be deemed to accrue or arise in India:-- (vii) Income by way of fees for technical services payable by--
(b) a person who is a resident, except where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or :-17-:
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Explanation 2.--For the purposes of this clause, 'fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".
Explanation -- For the removal of doubts, it is hereby declared that for the purposes of this section, income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause(vii) of subsection. (1) and shall be included in the total income of the non-resident, whether or not,-
The non-resident has a residence or place of business or business connection in India; or The non-resident has rendered services in India. Hence the market study being in the nature of Technical Services the remittances is treated as FTS income in the hands of E&Y and is liable to TDS.
Without prejudice to the above, the said market study is in the nature of information concerning commercial experience and hence is Royalty under Indo UAE DTAA. To quote the same "the term "royalties" as used in Article means payment of any kind received as a consideration for the use of, or the right to use, any copyright of literately, artistic or scientific work, including cinematography films, or films tapes used for radio or tee vision broadcasting, any patent, trade mark, artistic or scientific work, including cinematography films or tapes used for radio or television broadcasting, and patent, trademark, design or model, plan, secret formula or process, or for the use of or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience but do not include royalties or other payments in respect of the operation of mines or quarries or exploitation of, petroleum or other natural resources...."
Therefore I upheld the action of the AO to treat the payment of consultancy charges amounting to Rs.12,01,000/- paid to :-18-:ITA No.2721/Chny/2017
EARNST and Young UAE as FTS or Royalty liable to 10% TDS and as appellant has failed to do so, hence appellant is in default in view of sec 201(1) of the Act and therefore the AO has rightly levied tax and interest u/s 201(1) & u/s 201(1A) of the Act. The ground of appeal is therefore dismissed."
9. We have heard the rival submissions and gone through relevant material.After examination of the definition of market study and provisions of section 9 (1) (vii), the Indo UAE DTAA, the Ld CIT(A) has, inter alia, held, supra, that the market study being in the nature of Technical Services, is in the nature of information concerning commercial experience and hence Royalty. Therefore, the impugned remittances are treated as FTS income in the hands of E & Y and is liable to TDS. Since, the assessee has not placed any material to dislodge the findings recorded by the Ld CIT(A), we do not find any reason to interfere with his order. The corresponding grounds of the assessee fails.
10. In result, the assessee's appeal is partly allowed.
Order pronounced on 28th February, 2019 at Chennai.
Sd/- Sd/-
(एन.आर.एस. गणेशन) (एस.जयरामन)
(N.R.S.Ganesan) (S.Jayaraman)
( या यक सद!य /Judicial Member) (लेखा सद!य / Accountant Member)
चे नई/Chennai,
$दनांक/Dated: 28th February , 2019
somu
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आदे शक त(ल)पअ*े)षत/Copy to:
1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकरआयु+त) अपील(/CIT(A)
4. आयकरआय+ ु त/CIT 5. )वभागीय त न.ध/DR 6. गाड1फाईल/GF