(210.4 KiB, 1,176 DLs)

Fees for “routine technical repairs” not assessable as “fees for technical services”

The assessee paid sums to foreign parties for repairing and refurbishment of equipment. The AO held that the payments constituted “fees for technical services” u/s 9(1)(vii) and that the assessee ought to have deducted TDS u/s 195 r.w.s. 201 though the assessee argued that as there was no intellectual aspect involved in the repairs and refurbishment activity, it was no assessable as “fees for technical services”. The CIT (A) allowed the claim. On appeal by the department to the Tribunal, HELD dismissing the appeal:

The activities carried out by the foreign parties involved assembly, disassembly, inspection, reporting and evaluation. These are routine maintenance repairs and do not involve services of technical nature so as to be assessable as “fees for technical services” u/s 9(1)(vii). Routine repairs do not constitute ‘FTS’ as they are merely repair works and not technical services. Technical repairs are different from ‘technical services’ (Lufthansa Cargo 274 ITR (AT) 20 (Del) followed; Mannesmann Demag 26 ITD 198(Hyd) distinguished)