TDS not deductible on rental or ocean freight for ships as covered by Article 8 of India-Korea DTAA

Doosan Power Systems India Pvt Ltd Vs JCIT (ITAT Chennai)

ITAT Chennai held that payment of rental or ocean freight for ships is covered by Article 8 of India-Korea DTAA. Accordingly, the assessee is not liable to deduct TDS and therefore, disallowance invoking provisions of section 40(a)(i) of the Income Tax Act unsustainable.

Facts- The assessee company is engaged in the business of designing, building, installing, and maintaining engineering plants, with a specialization in thermal and coal power plants. The assessee company renders engineering services to its associated enterprises, Doosan Heavy Industries & Construction Co. Ltd.

The assessee contested against the order of AO following the directions of DRP in disallowing the Ocean Freight charges paid by assessee to M/s. Doosan Corporation Korea for non-deduction of TDS by invoking the provisions of section 40(a)(i) of the Act.

The question involved here is whether these ocean freight charges will fall within the scope of fee for technical services or royalty u/s.9(1)(vi) or Article 12.3 of the DTAA.

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