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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-:

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-:

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-: