Case Law Details
Intertek India Private Limited Vs ITO (Delhi High Court)
Introduction: In a recent decision, the Delhi High Court provided relief to Intertek India Private Limited, setting aside a notice issued under Section 201 of the Income Tax Act, 1961, and subsequent proceedings. The court emphasized that the management fees paid to Associated Enterprises (AEs) did not fall under the category of ‘fee for technical services’ (FTS), and therefore, Tax Deducted at Source (TDS) was not applicable.
Background: Intertek India Private Limited faced a notice dated 10.10.2017, alleging a failure to deduct TDS on management fees amounting to Rs. 2,06,29,647. The Assessing Officer disallowed the amount under Section 40(a)(i) of the Income Tax Act during the assessment order on 27.12.2016. However, the Commissioner of Income Tax (Appeals) [CIT(A)] later deleted the disallowance in an order dated 04.2019. The CIT(A) reasoned that management fees paid to AEs did not qualify as ‘fee for technical services,’ making it exempt from TDS under Section 195 of the Act.
The Tribunal, in an order dated 29.09.2022, upheld the CIT(A)’s decision. The Tribunal emphasized that the Assessing Officer failed to identify the “highly technical services” provided by AEs and did not reference relevant clauses demonstrating the expertise made available to the assessee. Additionally, it noted that similar decisions in favor of the assessee for other assessment years were not challenged.
Court’s Decision: The High Court, taking note of the Tribunal’s findings, ruled in favor of Intertek India Private Limited. The court observed that the CIT(A)’s decision was not rebutted, and the Assessing Officer failed to provide evidence of the technical nature of the services. The court further highlighted that the appeal against the Tribunal’s order was not filed, and if filed now, it would be time-barred.
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