Case Law:Payment made by the resident company to KPMG, Brazil for assisting in the acquisition of sugar mills in Brazil is not “Fees for Technical Services

The payment made by the resident company to KPMG, Brazil for assisting in the acquisition of sugar mills in Brazil is not “Fees for Technical Services”. Hence, the assessee is not liable to deduct TDS, as held by MumTrib in ITO(IT)-TDS-3 v Bajaj Hindustan Ltd — In favour of: The assessee.

 

ITO(IT)-TDS-3 v Bajaj Hindustan Ltd. ITAT BENCH “L”, MUMBAI ITA No. 63/MUM/09(2007-08)

1. This is an appeal by the assessee against the order dated 17/9/2008 of CIT(A) 33 Mumbai relating to assessment year 2007-08.

2. The assessee is a company. It is engaged in the business of manufacturing of sugar. According to the assesse, it engaged the services of M/s. KPMG Corporate Finance Ltd., Brazil (KPMG)(Non-Resident), to advice and assist the assessee in acquisition of Sugar Mills/Distilleries in Brazil. In connection with the services rendered by KPMG for the said purpose, the assessee had made payment to KPMG. The question before the ITO (International Taxation),TDS-3, Mumbai (AO), was as to whether the Assessee was bound to deduct tax at source on the payment made to KPMG in terms of Sec.195 of the Income Tax Act, 1961 (the Act). That would again depend on the question whether the payment by the Assessee to KPMG would be taxable in the hands of KPMG in India.

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