The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that receipts from provision of Disaster Recovery Up-Linking Services and disaster recovery play-out services are not Fee for Technical Service (FTS) under India-Singapore Double Taxation Avoidance Agreement (DTAA).
The assessee, Planetcast International Pte. Ltd.e is a non-resident corporate entity and a tax resident of the Republic of Singapore. principal activities of the assessee are that of satellite telecommunication network operations and wholesale of electronic and telecommunication equipments and parts
During the course of assessment proceedings, the Assessing Officer noticed that the assessee had receipts from provision of disaster recovery up-linking services and disaster recovery play-out services which was Fee for Technical Services (FTS) under section 9(1)(vii) of the Act and Article 12(4) of India-Singapore DTAA.
Thereafter, the AO concluded the Assessment and made addition and held that the receipts from disaster recovery play-out services and disaster recovery up-linking services are in the nature of FTS both under section 9(vii) of the Income Tax Act and Article 12(4) of India -Singapore DTAA
Aggrieved, the order assesee filed an objection before the Dispute Resolution Panel (DRP) who upheld the addition. Therefore, the assessee filed appeal before the tribynal.
Before the tribunal, Ajay Vohra C, Counsel for assessee submitted that identical issue was decided in favour of assessee in the assessment year 2017-18.Therefore these receipts for these services are not FTS.
Vizaya Vasanta, Counsel for Revenue, supported the decision of the lower authorities.
The tribunal observed that the receipts from disaster recovery playout services are not in the nature of FTS as they do not make available any technical knowledge, experience, skill, know-how, or process or consist of the development and transfer of any technical plan or technical design.
Therefore, assessee has provided Disaster Recovery Playout services to its customers through its facility in Singapore and the customers are not provided with any technology knowledge, experience, skill, know-how or processes as envisaged under Article 12(4)b of the DTAA.
After reviewing the facts and submissions of both parties, the two-member bench of B.R.R. Kumar(account member) and Saktijit Dey (Vice-President) held that payments received by the assessee as consideration for providing disaster recovery playout services are not taxable as FTS.
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