Sum paid to foreign co. for production of 2D and 3D animated films wasn’t fees for technical service

No element of any technical services was involved in production of animation films, thus, provisions of section 9(1)(vii), would not apply to payments made by assessee to foreign sub-contractors for production of animated films.

Facts:

a)The assessee was engaged in production of 2D and 3D animation films. It had outsourced part of its project on sub-contract to foreign sub-contractors.

b)The assessee had made payments to foreign companies as per agreement, named as 'Outsourcing Facilities Agreement'. The Assessing Officer (‘AO’) held that the payments made to foreign companies were 'fees for technical services' and, thus, said payments were taxable in India.

c)Since the assessee had not made TDS before making aforesaid payments, it was to be treated as assessee-in-default under section 201 and 201(1A). On appeal, the CIT(A), set aside the order of AO. The aggrieved-revenue filed the instant appeal.

The Tribunal held in favour of assessee:

1)There was no element of any technical services involved in the production of animation films to attract the provision of section 9(1)(vii), read with section 5(2)(b).

2)It is possible that job undertaken by one party for the other party' of supply of any goods or services may involve utilization of the knowledge, information and expertise of the party undertaking the said job.

3)However, just because such expertise, knowledge, technology and experience are possessed by the said party and the same have been utilized for rendering the services, it cannot be said that the services so rendered are in the nature of technical and consultancy services without making any technology available to the other party.

4)Thus, the impugned payment made by the assessee could not be treated as 'fees for technical services'.

5)The foreign parties had not done any activity in India nor they had any permanent establishment in India. As there was no liability to deduct tax on the impugned payments under section 195, the AO was not justified in raising demand on assessee. Thus, the appeal of revenue was to be dismissed.- ADIT (INTERNATIONAL TAXATION) V. DQ ENTERTAINMENT (INTERNATIONAL) (P.) LTD [2014] 45 taxmann.com 17 (Hyderabad - Trib.)

SEBI is empowered to monitor call records of any person against whom any enquiry or investigation is pending

SEBI is authorized to call for call data records from telecom service providers. However, such power can only be exercised it in respect of a person against whom an authorized officer conducts any investigation or enquiry. Facts: a)The petitioner, Indian Council of Investor, filed the instant PIL alleging violation of fundamental right of privacy by SEBI as it had intercepted and monitored calls and called for Call Data Records (CDRs) from Telecom Service providers (TSP). b)The petitioner further stated SEBI was prohibited from calling for any records such as CDRs from any TSP in view of Section 5 (2) of the Indian Telegraph Act, 1885. The SEBI denied allegation made against it on ground that it had only called for data that was already available in the records of the telecom providers. c)The respondent stated that Section 5 (2) of the Indian Telegraph Act, 1885 has no application in respect of calling for CDRs from TSP as the provision only applies to intercepting call and, or prohibiting call/messages. The High Court held as under: 1)SEBI is authorized under SEBI Act to call for CDRs from TSP. However, this power is capable of misuse and can violate a citizen's right to privacy guaranteed by Article 21 of the Constitution. 2)SEBI cannot exercise such power for conducting a fishing enquiry. It cannot be a blanket power to hunt out information without any pending inquiry or investigation. This power can only be exercised by SEBI in respect of any person against whom any investigation or enquiry is being conducted. 3)Only an officer duly authorized by SEBI can call for information about CDRs from TSP. Thus, the instant PIL was disposed of- INDIAN COUNCIL OF INVESTORS V. UNION OF INDIA [2014] 45 taxmann.com 45 (Bombay)