DIT (IT) v. WNS Global Services (UK) Ltd.

Case Laws Analysis
Relied on Dy. CIT v. International Flavours & Fragrances (I) (P) Ltd. 2015 TaxPub(DT) 0001 (Chen-Trib)
Followed Director of Income-tax (International Taxation) v. NGC Network Asia LIC 2009 TaxPub(DT) 1304 (Bom-HC)

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The Tax PublishersITA (L) No. 1130 of 2012 2013 TaxPub(DT) 1082 (Bom-HC) : (2013) 052 (I) ITCL 0513 : (2013) 214 TAXMAN 0317 Income Tax Act, 1961 --Income deemed to accrue or arise in India --Under section 9(1)(vii)Fees for technical services--According to lower authorities, fees received by assessee for providing marketing and management services outside India could not be subjected to tax in India as the same was not attributable to the permanent establishment in India. Revenue held that the income was attributable to permanent establishment in India by virtue of force of attraction rules in Article 7(i) of India UK DTAA. *Held :* Was not justified as revenue had not specifically urged the force of attraction rules before the lower authorities. Consequently, the question as framed did not arise from the order of lower authorities which required interference. Income Tax Act, 1961, Section 9 read with Article 5 of DTAA between India and UK Income Tax Act, 1961 --Income deemed to accrue or arise in India --Under section 9(1)(vi) Royalty--Assessee had obtained from an International Telecom Operator lease line on payment of charges. These lease line facility in turn was provided to WNS India on cost to cost basis so as to have international connectivity for which international telecommunication operator charges were recovered. According to Tribunal, amount in question would not classify either as royalty or as income attributed to a permanent establishment in India. Thus there was no income earned by assessee which was subject to tax. *Held :* Rightly so as on the basis of finding of fact Tribunal concluded that there was no income earned by assessee which was subject to tax but was only a reimbursement of lease line charges paid by it to international telecom operator. Income Tax Act, 1961, Section 9 Income Tax Act, 1961 --Interest under section 234B--Chargeability Failure of payer to deduct--According to Tribunal, assessee being non-resident and the entire income of assessee subjected to TDS under section 195 and hence no liability arose under section 234B and 234C. Revenue contended that assessee was liable to pay advance tax even on the amount which had not been deducted under section 195. *Held :* Was not justified as following the decision in the case of DIT (International Taxation) v. NGC Network Asia LLC (2009) 313 ITR 187 (Bom.), it was concluded that when a duty was cast on the payer to deduct the tax at source, on failure of the payer to do so, no interest could be imposed on the assessee. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA (L) No. 1130 of 2012
2013 TaxPub(DT) 1082 (Bom-HC) : (2013) 052 (I) ITCL 0513 : (2013) 214 TAXMAN 0317

Income Tax Act, 1961

--Income deemed to accrue or arise in India --Under section 9(1)(vii)Fees for technical services--According to lower authorities, fees received by assessee for providing marketing and management services outside India could not be subjected to tax in India as the same was not attributable to the permanent establishment in India. Revenue held that the income was attributable to permanent establishment in India by virtue of force of attraction rules in Article 7(i) of India UK DTAA. Held : Was not justified as revenue had not specifically urged the force of attraction rules before the lower authorities. Consequently, the question as framed did not arise from the order of lower authorities which required interference.

Income Tax Act, 1961, Section 9 read with Article 5 of DTAA between India and UK

Income Tax Act, 1961

--Income deemed to accrue or arise in India --Under section 9(1)(vi) Royalty--Assessee had obtained from an International Telecom Operator lease line on payment of charges. These lease line facility in turn was provided to WNS India on cost to cost basis so as to have international connectivity for which international telecommunication operator charges were recovered. According to Tribunal, amount in question would not classify either as royalty or as income attributed to a permanent establishment in India. Thus there was no income earned by assessee which was subject to tax. Held : Rightly so as on the basis of finding of fact Tribunal concluded that there was no income earned by assessee which was subject to tax but was only a reimbursement of lease line charges paid by it to international telecom operator.

Income Tax Act, 1961, Section 9

Income Tax Act, 1961

--Interest under section 234B--Chargeability Failure of payer to deduct--According to Tribunal, assessee being non-resident and the entire income of assessee subjected to TDS under section 195 and hence no liability arose under section 234B and 234C. Revenue contended that assessee was liable to pay advance tax even on the amount which had not been deducted under section 195. Held : Was not justified as following the decision in the case of DIT (International Taxation) v. NGC Network Asia LLC (2009) 313 ITR 187 (Bom.), it was concluded that when a duty was cast on the payer to deduct the tax at source, on failure of the payer to do so, no interest could be imposed on the assessee.