Case Law Details
Inteva Products Netherlands BV Vs ACIT (ITAT Delhi)
ITAT Delhi held that amount received on account of business support services cannot be treated as ‘Fees for Technical Services’ (FTS) under Article 12(5) of India Netherlands DTAA and hence addition towards the same unsustainable.
Facts- Assessee is a company incorporated in Netherlands and is a tax resident of Netherlands. For the AY 2018-19, assessee filed return of income on 27.11.2018 showing income of Rs.48,50,157/-.
During the course of assessment, AO observed that assessee has received income of Rs.48,50,157/- on account of interest on ECB and income tax refund and assessee also received Rs.11,85,39,571/- on account of business support services from Inteva India. AO further noted that assessee in the return offered the revenue earned only on account of interest. The amount received for business support services was not offered as income on the plea that it is in the nature of business profit and in absence of Permanent Establishment (PE) in India, it is not chargeable to tax. The AO was not convinced. After elaborate discussion, he concluded that the payment of Rs.11,85,39,571/-received by the assessee from foreign company on account of business support services is held to be taxable as FTS taxable @ 10% plus surcharge and education cess and added to the total income of the assessee.
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