Income-tax Appellate Tribunal - L Bench Mumbai , Before SSh.Rajendra,Accountant Member and Amit Shukla,Judicial Member .I.T.A.4660Mum2013, Assessment Year: 2007-08 DCIT-7(2) Ms. Rediffusion Dentsu Young & Room No.624, M.K. RoadRubicam Pvt. Ltd. Mumbai-400 020. 6th Floor, Kalpataru Synergy, Opp., GrandVs. Hyat, Vakola, Santacruz(E) Mumbai-400 055. PAN:AAACR 5303 G (Appellant)( Respondent)Revenue by: Shri T.R. Paite-Sr.ARAssessee by: Shri Jitendra Jain Date of Hearing:20.09.2016 Date of Pronouncement: 20.09.2016 ,1961254(1) Order us.254(1)of Income-tax Act,1961(Act)Per Rajendra, A.M.-,Challenging order,dated 21032013,of CIT (A)-13,Mumbai Assessing Officer(AO)has filed present appeal.Assessee-company,engaged in business of advertising,filed its return of income on 30102007, declaring total income of Rs.7,37, 06, 944-.The AO completed assessment, us.143 (3) of Act, on 11112009, determining income of assessee at Rs.8,68,39,254-. 2.First Ground of appeal is about Feng Sui Consultancy charges of Rs. 43.05 lakhs. During assessment proceedings,the AO directed assessee to file details of legal and professional expenses.From details,he found that it included payment of Rs. 43,05,087- as Feng Sui consultancy charges of various branches of assessee.He held that charges related to layout and location of various items of its assets, that payment made by assessee would give advantage of enduring nature to it. He issued show cause notice to assessee asking it as to why expenditure should not be disallowed as being capital nature.After considering submission of assessee, AO held that expenditure incurred by it was capital expenditure.He did not allow depreciation on amount in question. 14660M13-Rediffusion DY&RPL 3.Aggrieved by order of AO, assessee preferred appeal before First Appellate Authority(FAA).After considering submission of assessee and assessment order,he held that assessee had incurred consultancy expenditure,that AO had not doubted genuineness of expenditure, consultancy expenditure was incurred on relocation of existence assets,that expenditure in question did not bring into existence of any new asset,that it was revenue expenditure.Finally,he allowed appeal filed by assessee in that regard. 4.Before us,the Departmental Representative (DR)supported order of AO. Authorised Representative(AR) stated that consultancy charges paid by assessee could not treated capital expenditure,that expenditure was incurred for not purchasing any capital asset. He referred to order of Tribunal in case of Estel Technologies Pvt. Ltd. (ITA No.329(Del.)2010 dated 08.11.2010 for AY :2007-08). 5.We have heard rival submissions and perused material available on record.We find AO had treated expenditure as capital expenditure because he was of opinion that expenditure was incurred in relation with fixed capital assets,that FAA has given categorical finding of fact that payment was made only on account of consultancy and it was for Re-allocationre adjustment of furniture or certain other items.In our opinion, FAA was justified in holding that expenditure did not bring into existence any asset. In case of Estel Technologies Pvt. Ltd. (supra), Tribunal has allowed expenditure incurred by assessee under head Vastu-Puja as revenue expenditure.Respectfully following above order and considering facts of case,we hold that order of FAA does not suffer from any legal infirmity.Confirming same,we decide first ground of appeal against AO. 6.Second ground deals with deleting disallowance of professional charges of Rs. 43.60 lakhs us.40 (a)(i) of Act. During assessment proceedings,the AO found that assessee had not deducted tax while making payments to non-resident companies. He held that payments were in nature of charges for technical services related to advertising fields, that claim made by assessee was not allowable as per provisions of section 40 (a) (i) of Act, that fee for technical services was specific category in itself. Finally,he added disputed amount to total income of assessee.2 4660M13-Rediffusion DY&RPL 7.During appellate proceedings,before FAA, assessee argued that as per provisions of Act and applicable double taxation treaty no tax was detectable for payments made by assessee, that payments were not in nature of fees for technical services, that amounts were paid outside India, that it was business income in hands of non-resident parties to home payments were made, that recipients had no casePE in India, that same were not taxable, that no tax was directed in accordance with DTAA, that payment made by assessee was not technical fee. In support of its argument that no tax was required to be rejected on such payments, assessee relied upon certain case laws. After considering submission of assessee, and assessment order, FAA held that obligation to deduct tax at source would arise only excess payment was chargeable under Act as per provisions of section 4, 5 and 9 of Act.He referred to case of GE India Technology (327 ITR 456) and held that merely because person had not deducted tax at source from remittance brought it could not be inferred that person making remittances had committed mistake in discharging his duties with regard to withholding of taxes, that such obligation would arise only when recipient had tax liability in India. After going through tax invoices, selected by assessee, FAA held that payments were made on account of cost film production, Courier cost, dubs cassettes,cost of dubbing job, production estimate, that payments were not made for obtaining any technical or professional services from non-residents, that there was no element for royaltyinterest involved in payment, that payments were made abroad, that non-resident recipients were not having any permanent establishment in India, that there was no income received by non-resident entities in India, that provisions of section 4,5 and 9 of Act were not applicable.Finally,he deleted disallowance made by AO. 8.Before us, DR supported order of AO. AR stated that non-resident parties had not rendered any technical services to assessee, that payments were made to parties who had no PE in India, that job was done by non-residents outside India, that assessee had paid production cost only.He relied upon case of IMG Media Limited(60 taxmann.com.432) 9.We have heard rival submissions and perused material before us. We find that AO had invoked provisions of section 40(a)(i) of Act only on ground that assessee had made payments to non-residents. In our opinion,all payments made by Indian-34660M13-Rediffusion DY&RPL assessee does not attract provisions of ChapterXVIIB. It is fact that payments were made to non-residents who had not rendered any services in India and job was carried out outside India.There is nothing on record to prove that non-resident entity had rendered any technical service to assessee.The FAA had analysed invoice issued by non- resident and had found that payment was made only for job-work done and no royalty was paid by assessee. non-resident entity did not have any PE in India. Therefore, in our opinion,the FAA were justified in holding that tax deducted at source provisions were not applicable for such remittances. We find that in case of IMG Media Ltd. (supra), Tribunal has dealt with similar issue and has held that sum paid by assessee for capturing and delivering live audio and visual coverage of IPL cricket matches was not fee for technical services, as BCCI had not acquired technical expertise from assessee which would enable them to produce live coverage feeds on their own after conclusion of IPL. One of us(JM)was party to that order.The facts of case were that in that matter assessee, UK-based company, was engaged by BCCI for capturing and delivering live audio and visual coverage of cricket matches,that BCCI made payment to assessee, that AO held that amount received by assessee was in nature of fee for technical servicesroyalty, that dispute resolution panel held that services were nothing but technical services as per section 9(1)(vii) of Act as well as Article 13, that assessee submitted that it did not make available any technology knowhow relating to production of live coverage and that it only supplied program content produced by it, that amount received by it from BCCI could not fall under category of fee for technical services in term of Article 13 (4) (c) of DTAA. Tribunal, as stated earlier, had decided issue in favour of assessee. Considering peculiar facts of case under consideration and respectfully following order of IMG Media Ltd.(supra),we uphold order of FAA. Ground number two is decided against AO.As result, appeal filed by AO stands dismissed..thOrder pronounced in open court on 20 ,September, 2016. 20, , 2016Sd- Sd--( Amit Shukla ) ( Rajendra) JUDICIAL MEMBERACCOUNTANT MEMBER Mumbai; Dated :20.09.2016. Jv.Sr.PS. 45, ITAT, Mumbai. Dy.Asst. RegistrarBY ORDER, True Copy6.Guard File5.DRL Bench, ITAT, Mumbai,, . . .3.The concerned CIT(A), 4.The concerned CIT 1.Appellant 2. Respondent Copy of Order forwarded to :4660M13-Rediffusion DY&RPL DCIT-7(2), Mumbai v. M/s. Rediffusion Dentsu Young & Rubicam Pvt. Ltd