Case Law Details
ACIT Vs IQOR India Services Pvt. Ltd. (ITAT Delhi)
Assessee submitted that there are a number of decisions of the co–ordinate Benches, wherein, with reference to India-Philippines DTAA, it has been held that, even, in absence of FTS clause, the income would be governed under the other provisions of DTAA, hence, has to be treated as business profit under Article 7, which, in absence of a PE cannot be taxed in India.
In case of Jynga Game Networks India (P) Ltd. vs. ACIT in ITA No.2139/Del/2017 dated 03.08.2018, the co-ordinate bench has held as under:
“15….As far as the case of the assessee that the payment in question is in the nature of ‘FTS’ and since the recipient of payment was a tax resident of Philippines and since there is no FTS clause in the said DTAA, the sum in question can be charged to tax only under Article 7 of DTAA as business profits and since Startpoint does not have a PE in India, even under Article 7, the sum in question cannot be brought to tax, is a correct argument and ought not to have been rejected by the CIT(Appeals). We find support for the above said conclusion from the decision of the Tribunal rendered in the case of ABB FZ LLC (supra) and the decision in the case of IBM India Pvt. Ltd. (supra). The facts of the assessee’s case and the facts in the decisions referred to above are identical. The ratio laid down in the aforesaid cases that a payment in the nature of FTS made to Philippines tax resident in the absence of a PE of such tax resident of Philippines in India, income is not chargeable to tax in India supports the plea of the assessee in this regard. We therefore hold that the sum in question cannot be taxed as FTS in India. Consequently, there was no obligation in the part of assessee to deduct tax at source u/s 195 of the Act. Consequently, there cannot be any disallowance u/s. 40(a)(ia) of the Act.”
No contrary decision has been brought to our notice by learned Departmental Representative. Therefore, respectfully following the ratio laid down in the decisions, referred to above, we uphold the decision of learned Commissioner (Appeals) on the issue.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
