Case Law Details
N.M. Rothchild & Sons Ltd. Vs DCIT (ITAT Delhi)
Conclusion: In present facts of the case, it was held that the services rendered were in the nature of advisory services as per the terms of the agreement, therefore these services cannot be the part of Fees for Technical Services (FTS) under Article 13 of India – UK DTAA. Further, in the assessment orders, the Assessing Officer himself has stated that some of the services are of the nature of FTS. Thus, the Assessing Officer clearly admits that all the services rendered by the assessee were not in the nature of FTS.
Facts: In present facts of the case, Captioned appeals have been filed by the assessee challenging the final assessment orders passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 pertaining to assessment years 2018-19 and 2019- 20, in pursuance to the directions of learned Dispute Resolution Panel (DRP). The only common issue arising for consideration is regarding taxability of certain receipts earned by the assessee as Fees for Technical Services (FTS) under Article 13 of India – United Kingdom (UK) Double Taxation Avoidance Agreement (DTAA).
Assessee is a non-resident corporate entity and a tax resident of UK. While verifying the return of income filed by the assessee for the impugned assessment year, the Assessing Officer noticed that, though, the assessee had received an amount of Rs.1,54,35,120/- and Rs.2,45,19,751/- for the assessment years 2018-19 and 2019-20 respectively, however, he has not offered them to tax. On further verification of facts, he found that the aforesaid amounts were received by the assessee towards rendition of services pertaining to human resources, finance, legal and compliance and conducting of internal audit assurance work to its associated enterprise. Being of the view that such receipts are in the nature of FTS under Article 13 of India – UK DTAA, the AO observed that some of the services rendered by the assessee to the India AE are in the nature of FTS. Accordingly, he framed the draft assessment orders. Against the draft assessment orders, the assessee raised objections before learned DRP. Learned DRP disposed of assessee’s objections in cryptic and unreasoned manner by upholding the decision of the Assessing Officer.
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