Case Law Details
Buro Happold Limited Vs. DCIT (ITAT Mumbai)
Background
Nowadays, it is quite normal that multinational companies or companies belonging to same group having international presence share their human resources, experiences, technical knowledge & know how for overall growth and development of the group. From taxability point of view, the consideration paid by the service receiver to the service provider for receipt of such technical services are on continuous radar of the Income Tax Authorities. The tax authorities while analysing this transaction look at the substance of the transaction rather than its form due to which, issues relating to withholding of tax at the time of payment/credit or taxability of such income earned by the foreign company arises.
The definition of ‘Fees for technical services’ as per Explanation 2 to section 9(1)(vii) of the Income Tax Act, 1961 (‘the Act’) states that:
“fees for technical services” means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”.
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