ITO v. B.A. Research India (P.) Ltd.

INCOME TAX ACT, 1961

--Income deemed to accrue or arise in India--Under section 9(1)(vii)Bio-analytical services----Where assessee sent samples to experts outside India and those experts submitted their report, and there was nothing on record suggesting that services rendered to assessee were made available to assessee and also assessee was able to apply the same of his own, such service would not fall within ambit of 'included service' and thus, assessee had no liability to deduct TDS under section 195.--Assessee had made payment to non-resident parties of USA and Canada on which no tax was deducted. AO held that payments made were taxable both as per provisions of IT Act and DTAA between India and Canada. CIT(A) held that services provided to the assessee by non-resident parties did not fall within the purview of 'included services' under article 12(4)(b) and, hence, there was no liability on the assessee to deduct tax under section 195 while making payment for such bio-analytical services rendered to it. Held: CIT(A) had given a finding on fact that the service which was technical in nature could be said to be 'fees for included services' only when it had 'made available' technical knowledge or skills to the recipient of services, i.e., recipient of services could apply the same on his own. In the present case, the assessee had sent samples to the experts outside India and those experts submitted their report. There was nothing on record suggesting that the services rendered to the assessee were made available to the assessee and also the assessee was able to apply the same of his own. In the absence of the same, such service would not fall within the ambit of the included service.