32.2 C
Dubai
Friday, November 1, 2024
spot_img

Payments to Oilstone UAE without FTS in Indo-UAE DTAA have no TDS: ITAT

[ad_1]

TDS - Payments - Oilstone UAE - FTS - Indo-UAE - DTAA - ITAT - Income Tax - Taxation - taxscan

this Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) believes that if there is no Fees for technical services (FTS) clause in the India-UAE DTAA.

The assessee, Kalpataru Power Transmission Ltd., is an Indian company engaged in engineering, procurement and construction (EPC) contracts related to infrastructure. As one of the EPC projects performed by the branch of the assessed party in Uganda, the assessed party has paid to Oilstone Technologies DMCC (Oilstone UAE) for tower design services including foundation design and structural drawings, and did not deduct at that time Tax. The Assessee is concerned about the source of such payments on the grounds that such payments are not taxable in India.

From the details submitted by the assessee, the TDS officer noted that it had made payments to Oilstone UAE and had not deducted TDS from such payments, even though the payment was based on a service agreement between the assessee and Oilstone UAE and pursuant to the 1961 Section 9(l)(vi) of the Income Tax Act 2010, the payment is of a royalty nature. Accordingly, the TDS Officer made demands on the assessee pursuant to sections 201(1) and 201(1A) of the Act.

Milin Mehat, acting for the Assessed, submits that these payments qualify as royalties, and because the Assessed company is headquartered outside India, Ld. CIT (appeal) erroneously held that, given Section 9 (1) (vii )(b), the amount is not taxable in India and the assessee is therefore not obliged to withhold tax sources. He also submitted that the FTS payment was made to an overseas company based outside the UAE to earn income outside India and that payments to Oilstone UAE are not taxable in India under the India-UAE DTAA.

Umesh Sinha, on behalf of Revenue, argued that the absence of FTS clauses in the India-UAE tax treaty, therefore, further supports the fact that these services are not taxed as FTS in India.

The bench judges Waseem Ahmed (accounting member) and Siddhartha Nautiyal (judicial member) dismissed the department’s appeal, holding that the tower design fee paid to Oilstone UAE was FTS in nature and not a royalty. “Since, in the absence of the FTS clause in the said treaty, the payment does not qualify as FTS under the Indo-UAE tax treaty, we believe that the Assessee was not required to withhold tax on such payments to Oilstone UAE,” The judge further observed.

Subscribe to Taxscan Premium to view verdicts

Support our newsletter by subscribing Taxscan Premium. follow us telegraph quick update

di. CIT and Kalpataru Power Transmission Ltd.

Citations: 2023 TAXSCAN (ITAT) 747

Appellant’s Counsel: Shri Milin Mehat

Defendant’s Counsel: Shri Umesh Sinha



[ad_2]

Source link

Related Articles

The Journey of Berrylush: A Story of Passion, Perseverance, and Purpose

In 2018, Berrylush was born from the shared vision of two IIM graduates, AnushaChandrashekar and Alok Paul, who saw a glaring gap in the...

UAE Strengthens Global Alliances: Landmark Diplomatic Engagements with Russia and Singapore Propel Strategic Partnerships

UAE has been actively engaged in high-level diplomatic efforts, further cementing its role as a key player on the global stage. Recently, President Sheikh Mohamed...

Sheikh Mohamed bin Zayed and Sheikh Mohammed bin Rashid Join Forces to Shape UAE’s Future Development

Sheikh Mohamed bin Zayed Al Nahyan and Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, convened for high-level discussions centered on the...

New Bridges on Al Khail Road Boost Mobility and Unlock Growth

New bridges on Al Khail Road marks a major milestone in the UAE’s commitment to enhancing mobility and supporting economic growth. As one of Dubai’s...

UAE Visa Amnesty Program Empowers Thousands with a Fresh Start.

UAE latest visa amnesty program has brought a wave of relief and optimism, offering thousands of individuals an opportunity to regularize their immigration status. Launched...

Latest Articles