Decore Exxoils (P) Ltd. v. ITO [ITA Nos. 196 &
197/Ind/2018, dt. 20-10-2020] : 2020 TaxPub(DT) 4405 (Indore-Trib)
Payments for subscription of manuals, flight training,
route navigation, parts and service bulletins to non-residents -- Whether
subject to TDS under section 195
Facts:
Assessee was a non-scheduled flight licence operator to
operate Lear jet aircrafts. They had to make payment to overseas (USA) for the
following --
1. Subscription charges for
instrument flight rules (IFR) to Germany.
2. Payments were made for
subscribing to route navigation manuals.
3. As part of the DGCA
commitment to maintain/upgrade trained pilots assessee had to make payments to
USA for flight simulator training modules.
4. Service and spare parts
bulletins were also availed from suppliers along with purchase of parts where
in the service parts bulletins was offered as a separate service.
It was the case of the revenue that all of the above
payment would be subject to TDS under section 195 of the Indo-German/Indo-US
DTAA and since assessee had not done TDS they were held to be in default. On
higher appeal -
Held in favour of the assessee that the said payments were
not subject to TDS under the Indo-German DTAA and under Indo-US DTAA. They were
not fee for technical services or royalties under German DTAA warranting human
intervention and were merely standard subscriptions thus not falling in the
definition warranting a TDS.
As for Indo-US DTAA they did not bring forth any specific
technical services/royalties which make available the technology/skill to
furtherance in the business of the assessee. Hence no TDS was warranted on the
same.