Case Law Details
ACIT Vs Expeditors International of Washington (ITAT Delhi)
No payment for international freight logistic support services and Global Account Management (GAM) expenses could be treated as technical services fee
Conclusion: Amount paid for international freight logistic support services and Global Account Management (GAM) expenses by assessee-foreign company to Indian company could not be treated as Technical Services or Fee for Included Services (FIS) and also could not be taxed under section 9(1)(i) as no income had accrued or arised from the business connection abroad in India.
Held: Assessee-foreign company was engaged in the business of providing global logistics services worldwide. It had agreed with an Indian Company for providing the freight and logistics services to each other. Each party agreed to render services to the other in respect of import and export of consignments. Assessee undertook the logistics operations with respect to the consignment in the USA and no part of the operations or business was carried out by the assessee in India. The entire dispute centered around the taxability of the amount received by assessee from an Indian comapny in respect of services performed outside India on the export consignments of Indian company originating from India. The primary question which arose for consideration was as to whether the payment in respect of these services could be held as ‘fees for technical services’ within the meaning of section 9(1)(vii). It was held that the services rendered by assessee did not fall within the purview of managerial, consultancy or technical services. The payment for freight and logistics could not be treated as technical services. Similarly, the provisions of Section 9(1)(i) were not attracted in this case as no income had accrued or arised from the business connection abroad in India. The explanation stated that only that part of income from business operations could be said to be accruing or arising in India only if it was relatable to the carrying of operations in India. Thus, the payment received by assessee neither fell under Section 9(1)(i) or Section 9(1)(vii).
FULL TEXT OF THE ITAT JUDGEMENT
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