The Delhi bench of the Income Tax Appellate Tribunal, allowing an appeal by M/s Lenskart Solution (P) Ltd, has held that TDS is not payable on the amount paid to Facebook Ireland.
The Assessee had e-filed its return of income dated 28.09.2012 by declaring a loss of Rs. 4,18,78,678/-. The Assessing Officer made an addition of Rs. 67,68,768/- on account of non-deduction of TDS on payment of marketing expenses.
The Assessee claimed that as the Assessee had made the payment to Facebook Ireland Inc. (In short “FII”), which admittedly did not have any permanent establishment (PE) in India and, therefore, the payments made to it for advertisement services were not chargeable to tax in India in view of the Article 7 of DTAA between India and Ireland.
The Tribunal bench comprising Shri Anil Chaturvedi, Accountant Member, and Shri N. K. Choudhry, Judicial Member observed that “the Commissioner while considering the aforesaid claim of the Assesseeand analyzing the provisions of section 9 & 195 of the Act, held that the DTAA between India and Ireland provides that the profits of the foreign enterprise shall be taxable only if it had carried on business in India through a permanent establishment (“PE”) situated therein. The Ld. Commissioner also observed that FII has certified that it has no permanent establishment (“PE”) in India and is a resident of Ireland for taxation purposes. The Ld. Commissioner finally concluded that there was no liability of tax on payments made for advertising services to FII.”
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