DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -1(1)(1), BENGALURU, BENGALURU vs. ALGONOMY SOFTWARE PRIVATE LIMITED, BENGALURU

ITA 1229/BANG/2024Status: DisposedITAT Bangalore15 October 2024AY 2018-19Bench: Shri George George K. (Vice President), Ms. Padmavathy S. (Accountant Member)20 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that payments for sales and marketing services to foreign subsidiaries do not fall under the ambit of Fees for Technical Services (FTS) as defined under the Act or DTAA. The Tribunal also upheld the allowability of ESOP expenses as a deduction.

What were the facts?

The assessee paid sales commission to its foreign subsidiaries for marketing services without deducting TDS. The Assessing Officer disallowed this expense under Section 40(a)(i) treating it as Fees for Technical Services (FTS). The AO also disallowed ESOP expenses.

What were the issues?

Whether payments made for sales and marketing services to foreign subsidiaries constitute Fees for Technical Services (FTS) requiring TDS deduction, and whether ESOP expenses are allowable as a deduction.

Which sections of the Income-tax Act were involved?

Section 40(a)(i),Section 195,Section 37(1),Section 9(1)(vii)

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Income Tax Appellate Tribunal, BANGALORE “A” BENCH, BANGALORE

Before: Shri George George K. & Ms. Padmavathy S.

For Appellant: Shri Narendra Kumar Jain, Advocate
For Respondent: Shri R.N. Siddappaji, CIT-DR
Hearing: 14.10.2024Pronounced: 15.10.2024

Per Bench These appeals of the Revenue are directed against the separate orders of the Commissioner of Income Tax (Appeals)-12, Bangalore [CIT(A)] dated 30.04.2024 for Assessment Years (AY) 2016-17 to 2018-19. The common issues contended by the Revenue for all the AYs pertain to: -

i) Disallowance u/s. 14(a)(i) of the Income Tax Act, 1961 (the Act) ii) ESOP expenses

Since the issues contended are common, these appeals were heard together and were disposed off by this common order. Algonomy Software Pvt. Ltd.

2.

The brief facts of the case are that the assessee is a dome

The order continues below.

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