Case Law Details
Adadyn Technologies Private Limited Vs DCIT (ITAT Bangalore)
The issue under consideration is whether assessee engaged in business relating to online advertising is considered as technical services or royalty Section 9(1)(vii) of the Income Tax Act, 1961?
ITAT states that, the AO has mainly placed reliance on the provisions of sec.9(1)(vii) of the Act, though he has made reference to DTAA at some place. ITAT notice that the AO has not properly analysed the nature of services rendered in the context of sec. 9(1)(vii) or DTAA, even though he has extracted the agreement entered between the assessee and M/s Adadyn Inc. The contention of the assessee is that the nature of services provided by the above said company is in the nature of business support services and not in the nature of consultancy services in strict sense. It is not shown that the above said contention of the assessee is wrong. Further, they also notice that the nature of services provided by M/s Adadyn Inc., USA has not been analysed by Ld CIT(A) also. On the contrary, it is the contention of the assessee that the first appellate authority has entertained erroneous belief that the assessee has been using market analysis/ online data/data bases etc., belonging to M/s Adadyn Inc. The above said observation of Ld CIT(A) was strongly objected to by the assessee. Hence the observation of the Ld CIT(A) that a part of payment constitutes Royalty is strongly disputed. Further, ITAT also notice that the Ld CIT(A) has also not properly analysed the provisions of article 12 of India USA DTAA. Without analysing the nature of services, the Ld CIT(A) has observed that the services were made available. Thus, ITAT notice that the Ld CIT(A) has rendered the decision without bringing on record supporting materials and also without properly analysing the provisions and contentions of the assessee. Accordingly, ITAT are of the view that all the contentions of the assessee require fresh examination at the end of Ld CIT(A). Accordingly, they set aside the common order passed by the Ld CIT(A) for the years under consideration and restore all the issues to his file for adjudicating them afresh by properly analysing nature of services.
FULL TEXT OF THE ITAT JUDGEMENT
All the three appeals filed by the assessee are directed against the common order dated 15.03.2019 passed by Ld CIT(A)-12, Bengaluru and they relate to the assessment years 2014-15 to 2016-17. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the demand raised by the AO u/s 201(1) and 201(1A) of the Income-tax Act,1961 [‘the Act’ for short].
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