Wipro Ltd. v. DCIT – Dated 09.02.2022 (ITAT Bangalore)

Wipro not liable for TDS under section 195 on sums paid for installation of IVRS equipment & AMC; Follows De Beers ruling

Bangalore ITAT rules in favour of Wipro, holds that payments made to Singaporean entities for various services did not constitute ‘fees for technical services’ under the India-Singapore DTAA’ as no technical knowledge was made available; Deletes the disallowance made under section 40(a)(i) made for non-deduction of tax at source;

Assessee-Company was subjected to reassessment proceedings under section 147 for AY 2006-07 whereby Revenue disallowed Rs. 25.06 lakhs paid to various non-residents by the Assessee for default in deducting tax at source under section 195 which was upheld by CIT(A);

ITAT refers to the definition of fees for technical services in India-Singapore DTAA and opines that in order to fall within the ambit of FTS, the service providers should have made available, to the Assessee, the technical knowledge, experience, skill, know-how etc.; Relies on Karnataka High Court ruling in CIT v. De Beers India Minerals (P) Ltd. (2012) 346 ITR 467 (Karn.) for the expanse of make available clause and accepts Assessee’s submission that these payments were made for installation of Norton IVRS equipments, AMC charges, purchase of kits etc.;

Thus holds, “the question of making available technical knowledge etc. does not arise in these set of facts.”;

Further states that these payments constitute business income and in the absence of PE of the vendors in India, these payments are not chargeable to tax in India requiring deduction of tax at source under section 195;

Accordingly, holds that the Assessee was not liable to deduct tax at source under section 195 on these payments and no disallowance under section 40(a)(i) was called for.

[In favour of assessee] (Related Assessment Year : 2006-07) – [Wipro Ltd. v. DCIT – Date of Judgement : 09.02.2022 (ITAT Bangalore)]