Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Difference

Sanmitra Sanjeev Ratnaparkhi (-) (223 Points)

10 April 2014

How can place of utilisation of service & the place at which such service is rendered be different?

{reference :- Sec.9(1) }

Reply
Follow
Share

4 Replies

SURESHAN K (Auditor) (189 Points)
Replied 11 April 2014

Originally posted by : Sanmitra Sanjeev Ratnaparkhi
	How can place of utilisation of service & the place at which such service is rendered be different? {reference :- Sec.9(1) }

please mention clause and sub-clause to be clarified

Upgrade to CAclubindia Pro. Subscribe Now!

Sanmitra Sanjeev Ratnaparkhi (-) (223 Points)
Replied 11 April 2014

Section 9 - Income Deemed to Accrue in India

Section 9(1)(v) - Interest

Section 9(1)(vi)v - Royalty

Section9(1)(vii)v - Fees for technical services

There at one stage, it is given that whether the non-resident has rendered the services in India or not, but if they are utilised in India, it is deemed to accrue in India.

SURESHAN K (Auditor) (189 Points)
Replied 12 April 2014

It is to be noted that under section 9(1)(vii)(b) & (c), the expression used is "fees for services utilized in India " and not the expression "fees for services rendered in India". It may be that some of the services are rendered abroad by the personnel employed or deputed by non-resident company under collaboration agreement with the Indian company. But if the fees are paid for services utilized by the Indian company in its business carried on by it in India, irrespective of the place where the services were rendered, the amounts of the fees should be deemed to accrue or arise in India.

In Steffen, Robertson and Kirsten Consulting Engineers and Scientists v. CIT [1998] 230 ITR 206 (AAR), where fees were paid in respect of preparatory studies carried out in South Africa, it was held that fees would be liable to tax as income accruing or arising in India, irrespective of whether these payments were made in India or abroad, when the payments were made for services to be utilized in India.

In Cochin Refineries Ltd. v. CIT [1996] 222 ITR 354 (Ker), the refineries requested a foreign company to evaluate whether the coke produced from a blend of vacuum bottoms and clarified oil from Bombay High crude was suitable for making Anodes for Aluminium Industry. The tests were carried out in the USA in regard to which the assessee made a payment of Rs. 7,69,614. It was held that the services rendered by the foreign company would be in the nature of technical services and would, therefore, consequently, be covered fully by the Explanation to section 9(1)(vii) as it was utilized in India.

I think the point is clarified

1 Like