M/S. G.S. FINANCIAL CORPORATION,JAIPUR vs. INCOME TAX OFFICER, WARD-1(2), JAIPUR

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ITA 480/JPR/2018Status: DisposedITAT Jaipur19 August 2019AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that additional evidence was produced for the first time, which was crucial to the issue. Therefore, the matter was restored to the Assessing Officer for a fresh decision after considering this new evidence.

What were the facts?

The assessee made payments for data services to foreign entities. The Assessing Officer disallowed these expenses under Section 40(a)(i) for non-deduction of TDS. The assessee argued that the services were automated and provided from outside India, thus not requiring TDS.

What were the issues?

Whether TDS was required on payments made to foreign entities for automated data services provided outside India, especially when new evidence is presented to the Tribunal.

Which sections of the Income-tax Act were involved?

Section 40(a)(i)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC

Before: SHRI RAMESH C SHARMAvk;dj vihy la-@ITA No. 480/JP/2018

For Appellant: Shri Rohan Sogani (CA) jktLo dh vksj ls@
Hearing: 06/08/2019Pronounced: 19/08/2019

ORDER PER: R.C. SHARMA, A.M. This is an appeal filed by the assessee against the order of ld.CIT(A)-I, Jaipur dated 01/11/2017 for the A.Y. 2012-13 in the matter of order passed U/s 143(3) of the Income Tax Act, 1961 (in short, the Act).

2.

In this appeal, additions are made by disallowing expenses U/s 40(a)(i) of the Act in respect of the payments of Rs. 1,63,160/- made to Global Financial Data Feeds LLP and Rs. 10,94,021/- made to Interactive data Solutions (Europe) Ltd..

1.

2 ITA 480/JP/2018 M/s Gs Financial corp. Ltd. ITO 3. It was argued by the ld AR of the assessee that the payment made to Interactive Data Solutions (Europe) Ltd., of Rs. 10,94,021/- was outside India.

2.2.i Interactive Data Solutions (Europe) Ltd. is not a tax resident of India 2.2.ii Interactive Data Solutions (Europe) Ltd. has got no Permanent Establishment in India 2.2.iii All the services provided by Interactive Data Solutions (Europe) Ltd. to the assessee firm were provided out of India 2.2.iv No servers of Interactive Data Solutions (Europe) Ltd. were located in India 2.2.v There was no human intervention in the services provided by Interactive Data Solutions (Europe) Ltd. All the services were provided through automated systems.

2.2.vi The services provided were standardized services and no part of service was customized for the assessee firm. Therefore, the assessee firm was not liable to deduct tax at source on the payment made to Interactive Data Solutions (Europe) Ltd., outside India, during the relevant previous year. As per the ld AR there is no provision of "managerial, technical or consultancy services" when there is no human touch at all or the basic data in the machine is entered by human efforts but the machine performs the key functions or any 3 ITA 480/JP/2018 M/s Gs Financial corp. Ltd. ITO technology or machine providing the services operates without much of human intervention or there is no human intervention requiring examination of technical data. In support of the above contention, reliance was placed on the various judicial pronouncements. Our attention was also invited to the following documents placed in the paper book:

S. No.. Particulars Page No. Copy of Terms of Use of Intercontinental Exchange, holding company of Interactive Data Corporation, as obtained from the website. 1. 1-14 (https://www.intercontinentalexchange.com/terms-of- use] Copy of Certificate of Incorporation of Interactive 2. 15 Corporation issued by Department of Treasury Copy of Certificate of Tax Resident of Interactive 3. 16 Corporation in United Stated of America Copy of Request for Taxpayer Identification Number 4. 17 and Certification Copy of Details of all Sub-Processors (including ICE 5. 18-19 Affiliates and third parties) Copy of Disclaimer of Global Data feeds, as obtained 6. 20-23 from the website of the service provider.

4.

As per the ld AR, the A.O. has made disallowance by disregarding various documents placed by the assessee.

5.

On the other hand, the ld DR has relied on the orders of the authorities below.

6.

I have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the assessee firm made online payment for Data Charges to Interactive Data

4 ITA 480/JP/2018 M/s Gs Financial corp. Ltd. ITO Solutions (Europe) Ltd. and Global Financial Data Feeds LLP through their respective websites. In entire such services received, there was no human intervention involved and all the services were received through automated systems. I found that the above documents mentioned in para 3 of this order were produced before me for the first time which goes to the root of the issue, therefore, in the substantial interest of justice, we restore this matter back to the file of the A.O. for deciding afresh after considering additional evidence placed before the ITAT for the first time which goes to the root of the issue. The A.O. is also directed to give due and effective opportunity of being heard to the assessee before deciding the matter. I direct accordingly.

7.

In the result, appeal of the assessee is allowed for statistical purposes only.

Order pronounced in the open court on 19th August, 2019

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