No TDS u/s 195 on Debtor Collection Charges

No withholding taxes from debtor collection charges paid by co-venture and in-turn reimbursed by assessee

[2015] 56 taxmann.com 387 (Mumbai - Trib.)

IN THE ITAT MUMBAI BENCH 'L'

Deputy Commissioner of Income-tax, 9 (3), Mumbai

v.

UPS Jetair Express (P.) Ltd

Section 9 of the Income-tax Act, 1961, read with article 12 of DTAA between India and USA - Income - Deemed to accrue or arise in India (Royalties and fee for technical services) - Assessment year 2008-09 - Assessee, an Indian company, was a joint venture between UPS WWF Inc., USA and 'J' Ltd. - It was engaged in business of international integrated transportation services - Based on a global arrangement 'RMS', USA provided debtor collection services to assessee rendered outside India - UPS WWF initially made payment to RMS, which was then reimbursed by assessee on cost-to-cost basis without any mark-up - During course of assessment proceedings, Assessing Officer opined that UPS WWF was only a conduit or a facilitator and assessee was not exonerated from its obligation to make TDS as per section 195 read with section 9(1)(vii) and Explanation to section 9(2) - Whether in view of fact that had assessee made direct payments to RMS for debtor collection services, it would not have fallen within ambit of Royalties or Fees for Technical Services under Act as well as under Article 12 of India-USA Tax Treaty, provisions of section 195 were not applicable - Held, yes [Para 12][In favour of assessee]