INCOME TAX ACT, 1961

Section 9(1)(vii)

Income deemed to accrue or arise in India - Under section 9(1)(vii) - Fees for technical services -

Assessee was a company incorporated in Denmark and was a part of AP Moller Maersk ('APMM') group, which was engaged in the business of Shipping and Logistics. In 2009, Logistics business of APMM group was hived-off into Damco Group. Pursuant to this, Damco India (P) Ltd. ('DIPL') was formed having full-fledged Board for earning its business. Assessee incurred certain costs towards procurement of insurance, accounting software, travel, fixed assets (computer servers), etc., at group level which were subsequently recovered from various group entities. AO arrived at a finding from examination of 'Management & Service Agreement' entered into by assessee with DIPL that services provided by assessee were in the nature of technical services. Accordingly, AO taxed the same as royalty and fees for technical services. Held: Services/procurement rendered by assessee were in the nature of coordinating services whereby various costs incurred were pooled together and charged/recovered as reimbursement costs on the basis of various allocation keys and reimbursement of cost towards administrative/procurement of products/coordinating services could not be held as fees for technical services and hence, there could be no taxability in India.

Relied on:DIT v. A.P. Moller Maersk AS (2017) 392 ITR 186 (SC) : 2017 TaxPub(DT) 638 (SC), CIT v. Kotak Securities Ltd. (2016) 383 ITR 1 (SC) : 2016 TaxPub(DT) 1609 (SC), Dy. CIT v. Ernst & Young (P) Ltd. (2018) 92 Taxmann.com 5 (Mum-Trib.) : 2014 TaxPub(DT) 2605 (Kol-Trib), Maersk Global Centres (India) (P) Ltd. v. Asstt. CIT [ITA No. 7466/Mum/2012] : 2014 TaxPub(DT) 1484 (Mum-Trib), Yash Raj Films (P.) Ltd. v. ITO (2012) 28 taxmann.com 247 (Mum-Trib.) : 2013 TaxPub(DT) 0581 (Mum-Trib) and Linde AG v. ITO 1997 TaxPub(DT) 1032 (Mum-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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