The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition made by the Assessing Officer (AO) stating addition made on account of fee for technical services is unsustainable.
The assessee Michael Page International Pvt Limited filed the appeal against the assessment order passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 for the A.Y. 2018-19.
In an appearance on behalf of the assessee, Pratik Shah stated that the assessee company is based in Singapore and operates in the executive search and recruitment industry. Additionally, it offers referral services and business support services to the Page group entities.
Further, during the period relevant to the assessment year under appeal, the assessee received referral fees Rs.4,21,64,190/- from its Indian Associated Enterprise (AE), Michael Page International Recruitment Pvt. Ltd.
The assessee filed returns, however AO held that the fees received by the assessee from its Indian entity is in the nature of “Fee for Technical Services” and hence, made addition.
The bench observed that the AO held that the fees paid by Indian entity to the assessee is covered under “fees for included services” as the “make available” clause is duly satisfied.
Furthermore, the AO held that the aforesaid income has been deemed to accrue or arise in India under section 9(1)(i) of the Income Tax Act. The amount charged was thus held to be fees for technical services as per section 9(1)(vii) (c) read with section Article 12(4) of the India – Singapore DTAA.
The “make available” clause of the Indo-Singapore tax treaty cannot be invoked under the facts of the current case, according to the bench of Gagan Goyal (accountant member) and Vikas Awasthy (judicial member), which recognized in the case of Shell Global International Solution BV vs. ITO. The revenue has not even established that providing these services to the Indian entity resulted in any transfer of technology or skill.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
