2009 (3) TMI 401 - KARNATAKA HIGH COURT

Income deemed to accure or arise in India – Remuneration of non-resident - (1) Whether the payments made to REOL attract tax liability under section 9(1) (vii) (c) read with the Explanation to section 9(2) of the Income-tax Act and whether Jindal was obliged to effect TDS in the payments made to REOL under section 195 of the Income-tax Act?- suggests that the criteria of residence, place of business or business connection of a non-resident in India have been done away with for fastening the tax liability. However, the criteria of rendering service in India and the utilisation of the service in India laid down by the Supreme Court in Ishikawajima’s case [2007] 288 ITR 408 to attract tax liability under section 9(1)(vii) remain untouched and unaffected by the Explanation to section 9(2). –amounts received by non-residetn for technical services, start-up services and overall responsibility – Held that technical services not taxable in India – Remuneration for start-up services and over all responsibility taxable in India - Held that person responsible for deducting tax at source on payment to non-resident has a right to appeal against order holding remuneration of non-resident taxable – Assessee-Jindal has not produced the customs duty documents to show that the amounts paid to REOL in respect of “technical services, start-up services and overall responsibility” form part of the cost price of the equipment. Therefore, the Income-tax Appellate Tribunal has rightly held that Jindal is not entitled to benefit under article 12(2) of the Double Taxation Avoidance Agreement. Accordingly, the appeals are partly allowed