Income earned from providing IT services to Indian customers is taxable in India due to use of service in India: ITAT
The Income Tax Appellate Tribunal (ITAT ) Kolkata held that Income earned from providing IT services to Indian Customers is taxable in India because the service is used in india.
Assessee, Metso Outotec OYJ filed its return of income electronically and declared income of Rs.4,05,940/- and Rs.2,33,61,680/- in A.Y. 2018-19 and 2020-21 respectively. Thereafter, the case of the assessee was selected for scrutiny assessment in both the years and accordingly notice under Section 143(2) was issued and served upon the assessee.
The assessee has provided IT Services to Indian customers during the relevant financial year. During the assessment proceedings assessee contended that income from IT Services in pursuance of a Service Agreement with Outotec India Private Limited.
However, the Assessing Officer was not satisfied with the contention of the assessee and he proposed the addition.
The assessee filed objections before the Dispute Resolution Panel (DRP) and the DRP has rejected the contention of the assessee and upheld the levy of taxation on the alleged receipt for sale of IT Services as FTS.
During the proceedings before the bench KM. Gupta, counsel for assessee submitted that Assessee has no permanent establishment in India and the services were performed outside India in Finland. Therefore, these receipts in lieu of IT Services are not taxable as FTS in the hands of the assessee.
Guru Bhashyam, Counsel for the revenue supported the decision of the lower authorities.
After considering the facts submitted by both parties, the two member bench of Rajesh Kumar (Accountant Member) and Rajpal Yadav (Vice President) observed that assessee has no permanent establishment in India and these services were also rendered outside India but the services has been used in India and, therefore, it is taxable in India.
case : Metso Outotec OYJ vs Deputy Commissioner of Income Tax CITATION: 2023 TAXSCAN (ITAT) 2254
Counsel for Appellant: Shri KM. Gupta, & Shri R. Malhotra Counsel for Respondent: Sri Guru Bhashyam
Additional Effect : TDS is a MUST in this case / Such cases by the Indian company
TDS : tax deduction at source, is a must, note the DTAA, none the less.
With Regards, Puneet Gupta and Sangeet Gupta, and all MLG Team members
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