Case Law Details
CIT Vs Star Rays (Gujarat High Court)
Gujarat High Court held that mere rendering of services cannot be roped into Fees for Technical Service (FTS) unless the person utilizing the services is able to make use of the technical knowledge etc. Simple rendering of services is not sufficient to qualify as FTS.
Facts- The issue involved in the present matter is that the assessee committed an error in mentioning the name of beneficiary while filling entry in Form 15CA/15CB. It mentioned in the form that the remittance advice issued by the Bank of India is also in the name of GIA Hong Kong Laboratory Ltd. The assessing officer, therefore, held that the assessee has made payment to GIA Hong Kong Laboratory and not GIA USA and therefore cannot claim the treaty benefit between India-USA, as also between India-China. That the assessee also ought to have deducted TDS before making payment to GIA Hong Kong and having failed to do so, the assessee is in default and therefore must pay Rs.4.43 crores under Sections 201(1) read with Section 201(1A) of the Income Tax Act.
Conclusion- Held that based on factual appreciation especially the condition in the customer service agreement, the bank invoice and the Bank remittance advice a finding of fact has been arrived at that the assessee’s case was protected under the India-USA DTAA and that mere rendering of services cannot be roped into FTS unless the person utilizing the services is able to make use of the technical knowledge etc. Simple rendering of services as in the present case is not sufficient to qualify as FTS.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
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