DCIT CENTRAL CIRCLE 7 4 MUMBAI, MUMBAI vs. ROHA DYECHEM PVT. LTD, MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “I” MUMBAI
Before: SHRI SANDEEP SINGH KARHAIL () & SHRI OMKARESHWAR CHIDARA () Assessment Year: 2014-15
PER OMKARESHWAR CHIDARA, AM This appeal by the Revenue is directed against order dated 05/06/2024 passed by the Ld. Commissioner of Income-tax (Appeals)-57, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014-15. 2. In the above cap against the order pa of Appeal: “1. "Whether on t the Ld. CIT(A) has Rs.2,03,91,052/- un the ground that fore without distinguishi undefined referral s category of technica could not be in the n 2. "Whether the had no PE in India Export Sales is deem the I.T. Act, 1961?" 3. Whether Ld. C Article 12(4)(b) of the the said article as " expression "provision rendering of services used in the other Sta 3. The issue to be applicable for the am was treated by Ld. corollary issue raised that the income has raised by the Revenu the payment to app Technical Services” Taxation Avoidance A in this case is, “w Roh ITA N ptioned appeal, the Revenue has assed by Ld. CIT(A) with the fol the facts and circumstances of the case a s erred in deleting the addition made nder section 40(a)(i) of the Income-tax Ac ign agent provided referral services to th ng how the FTS takes the nature of a s service and such referral services do not al, managerial or consultancy service, t nature of 'fees for technical services?" Ld.CIT(A) has erred in holding that the fo without recognizing that income earned med to have accrued or arisen in India u/ CIT(A) has erred in not recognizing that e e India-USA DTAA, the payment was cov "fees for included services" as defined t n for services" is wider than the term "p s" and covers services rendered in the on ate?” decided in this appeal is wheth mount received by the appellant . AO as “Fees for Technical d by Revenue is Ld. CIT(A) erred not accrued/arisen in India. Th ue is that Ld. CIT(A) has incor ellant company was not cover as per Article 12(4)(b) of Ind Agreement. Thus, the only issu whether the remittances mad ha Dyechem Pvt. Ltd. 2 No. 3848/MUM/2024 s filed an appeal lowing Grounds and in law, by AO of ct, 1961 on he appellant statutory by t fall in the therefore, it oreign agent d as a part s.9(1)(vii) of even as per vered under therein. The provision for ne State but her Sec 40 a(i) is company which Services”. The d in adjudicating he third ground rrectly held that red as “Fees for dia-USA Double ue to be decided de by assessee company as sales an the extent of Rs. 6.5 paid, as claimed reimbursements and testing fees to FDA an 4. The Ld. AO he under Article 22 of D for disallowance u/ assessment. The Ld. stating that these pa are normal business available knowledge o of the assessee an Certificate” in lieu of was also held that payments made to t USA DTAA. Hence, t assessee company’s A not in the nature of assessee company Consequently, Sec payments made by a made by Ld. A.O. was Roh ITA N nd marketing services during A 57 crore is liable for TDS.” The by a company, towards te commission. They were paid to nd to export sale agent. ld that all their payments are DTAA and as TDS was not done s. 40a(ia) of I.T. Act, while CIT(A) deleted the addition ma ayments won’t attract TDS pro expenditure because US FDA h or skills to carry out the testing nd the USFDA has simply i f the payments made by assess US FDA is a US Governme the same don’t govern the prov the testing charges paid to US AE towards testing charges paid f “Fees for Technical Services” is not under obligation t 40a(ia) provisions can’t be in assessee company and according s deleted by Ld. CIT(A). ha Dyechem Pvt. Ltd. 3 No. 3848/MUM/2024 A.Y. 2014-15 to e amounts were esting charges, o USFDA, AE for e liable for TDS e, they are liable completing the ade by Ld. A.O. ovisions as they has never made g of the products issued “Testing see company. It ent agency and visions of Indo- SFDA or paid to d to US-FDA are and hence the to make TDS. nvoked for the gly, the addition
In the above ci ITAT with the Ground 6. During the hea the assessment ord assessee has stated t by the International same assessment ye amounts and Ld. C Department held th detailed speaking Pronouncements. It w has not further appe CIT(A), i.e., accepted department has acce is not deductable on was sent to the asse reopened the assess this order, the asses same Ld. CIT(A)-57 h This subsequent Ld revenue, it was subm paper book containi CIT(A) order which w with a submission t Roh ITA N ircumstances, the Revenue file ds of Appeal mentioned in Page aring proceeding before ITAT, L der and Grounds of Appeal. that the same issue was raised Tax Wing of Income Tax Dep ar. The Ld. AO of Internationa CIT(A) dealing with Internation e issue in favour of assessee order after relying on s was submitted that the Interna ealed to ITAT on the order pas the order of Ld. CIT(A) which i epted the reason of assessee com n these payments. But, the sa ssment wing of I.T. Departmen ment and completed the asses ssee company against filed an has passed another order in as d. CIT(A)’s order is now appea mitted. The Ld. AR of assessee c ng the assessment order and were passed by the Internation that the Department did not fi ha Dyechem Pvt. Ltd. 4 No. 3848/MUM/2024 ed an appeal to 1 of this order. Ld. DR relied on The Ld. AR of by the Revenue artment for the al tax added the nal Tax of I.T. company in a several judicial ational Tax wing ssed by the Ld. implies that the mpany that TDS ame information t and they have ssment. Against appeal and the ssessee’s favour. aled against by company filed a the related Ld. nal Tax Division ile an appeal to ITAT. As the Departm cannot agitate the revenue should be di as on merits. 7. Heard both side appellant company appellant company fo a) The payments w Government age Certificate” and given to assesse “testing charges b) Payments made governed by th Avoidance Agree c) The USFDA doe received by it, is d) The assessee’s mere rendering assessee compa technical know rendering by a Roh ITA N ment accepted the order of Ld. C same before ITAT and hence ismissed on the principle of con es. There is force in the argume and the issues are adjudicate or the following reasons: were made by assessee compan ency of USA for the purpose of d knowledge or skill testing pro ee company in lieu of the paym s” were paid to US FDA. e to a Government agency, U he provisions of Indo-USA’s d ements. esn’t have PE in India and su s not taxable in India. case was protected under India g of services couldn’t be roped any utilising services was unable wledge etc., even where were US company, as held by Hon’b ha Dyechem Pvt. Ltd. 5 No. 3848/MUM/2024 CIT(A), now they e the appeal of nsistency as well ent of Ld. AR of ed in favour of ny to USFDA, a getting “Testing oducts were not ment made. Only USFDA, are not double Taxation uch, the income a-USA DTAA as into FTS since e to make use of e services were ble Gujarat High
Court in CIT(Int
226 (Guj). In th of USA, which is be roped into t
40a(ia) provision e) The Ld. AR of ap wing of Income
Mumbai vide assessee’s own appeal was pr payments were subsequent yea and no disallow and this fact wa years, the Dep stand that TDS made ppellant filed a copy of letter of e Tax Department signed by IT letter dated 13/08/2024 s case for the same A.Y, on s referred on CIT(A)’s order t e made by assessee company ars too, it was submitted by Ld.
wance u/s. 40a(ia) was made as not controverted by the Ld. D partment accepted the assess
S Provisions are not applicab
There being no change
Rule of consistency should bove, the appeal of Revenue is d ha Dyechem Pvt. Ltd.
6
No. 3848/MUM/2024
153 taxman.com ere made to FDA e payments can’t provisions/Sec.
Internation Tax
TO (IT) 4(1) (2), tating that in ame issues, no o ITAT. These in earlier and AR of appellant by Department,
DR. Thus, all the see’s company’s le to payments in facts and be followed by dismissed.
Order pronoun (SANDEEP SINGH
JUDICIAL MEM
Mumbai;
Dated: 24/01/2025
Poonam Mirashi,
Stenographer
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
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Roh
ITA N ced in the open Court on 24 KARHAIL)
(OMKARESHWA
MBER
ACCOUNTANT ded to :
BY ORDE
(Assistant Re
ITAT, Mu ha Dyechem Pvt. Ltd.
7
No. 3848/MUM/2024
/01/2025. d/-
AR CHIDARA)
T MEMBER
ER, gistrar) umbai