Case Law Details
ACIT Vs NTL Lemnis India Pvt Ltd (ITAT Delhi)
ITAT Delhi held that expense towards management and marketing support service paid to foreign company is not taxable under Fee for Technical Service (FTS) under India-Netherlands Double Taxation Avoidance Agreement (DTAA) and hence TDS not deductible u/s. 195 of the Income Tax Act.
Facts- The assessee is engaged the business of import/export, trading, manufacturing, commission agency, consulting, advising in any way dealing with lighting products and lighting solutions in the field of home lighting, public lighting, greenhouse lighting and solar lighting. The company is also engaged in research and development in the area of lighting products and solutions.
AO noted that the assessee had claimed management fee amounting to Rs. 9,85,54,700/ – paid to NTL Lemn is Holding BV and Rs. 1,08,57,200/-. From the scope of services the AO held that the nature of services contemplated under the Agreement was that of advisory and consultancy services which would be covered within the meaning of ‘fee for technical services’ (“FTS”) both under the Income Tax Act as well as the treaty.
Referring to the provisions of section 9(1) and the Explanation to section 9, AO held that FTS is payable by a resident would become an income of the nonresident payee deemed to accrue or arise in India and would be chargeable to tax under the provisions of the Income Tax Act.
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