In the absence of a specific 'Fees for Technical Services' article in a DTAA, income is governed by the 'Business Profits' article; absent a Permanent Establishment, such payments are untaxable in India, and the 'make available' test requires the transfer of technical know-how enabling independent future application.

O R D E R

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax Appeal, Kolkata-22, (hereinafter referred to as the “Ld. CIT(A)”] dated 26.08.2025 for the AY 2018-19.

At the outset, we note that the appeal of the assessee is barred by limitation by 14 days. At the time of hearing the counsel of the assessee explained the reasons for delay in filing the appeal. The Ld. D.R did not raise any objection in condoning the delay. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reasons and , hence, we condone the delay and adjudicate the appeal.

The only issue raised by the assessee in the various grounds of appeal is against the order of Ld. CIT (A) in confirming the demand of ₹35,57,540/- as made by the Ld. AO in respect of TDS default u/s.201(1) of the Act of ₹28,39,195/- and ₹7,18,340/- being interest u/s.201(1A) of the Act by treating the assessee in default u/s.201(1) of the Act.

The facts in brief are that the assessee is engaged in the business of real estate development and during the year was in the process of developing residential tower known as “The 42” in Kolkata. The assessee for the purpose of the said project, entered into a Technical Consultancy Agreement dated 01.05.2016 with Arabian Construction Co. WLL (ACCWLL), UAE. Under the said agreement, ACCWLL was engaged to review working drawings and examine their parity with actual construction. The scope of services broadly included advisory inputs on construction techniques, review of scaffolding and staging design, advisory on safety and security aspects of high-rise construction and review of quality of construction. The role of ACCWLL was purely advisory and consultative, confined to review, comments, and suggestions, without any transfer of technical know-how, processes, designs, or methodologies to the assessee. During the Financial Year 2017-18, the assesee made remittances to ACCWLL, UAE, of AED 4,32,000 on 29.03.18 and AED 3,30600 on 18.05.2017 after duly filing Form 15CA and Form 15CB, clearly stating the reasons for non-deduction of tax as "Business Profits under Article 7 of the India-UAE DTAA". ACCWLL was a tax resident of UAE and did not have any Permanent Establishment (PE) in India. The case of the assessee was selected for scrutiny and during the course of assessment proceeding, the assessee submitted copy of Form 15CA, 15CB, invoices, copy of agreement dt 01.05.2016, relevant bank statement, tax residency certificate of ACCWLI. However, as per section 9(1)(vii)(b) of the Act read with Explanation 2, DTAA between India-UAE and Circular No 33 dt 02.04.1982, the remittance made to ACCWLL of UAE by the assessee as "Fee for Technical Services" is taxable in India. According to the AO as per section 195(1) of the Act, the assessee is liable to deduct the tax at source @20% on the amount of remittance. Therefore as per section 201(1) of the Act assesee is an assessee in default and is liable to pay interest as per section 201(1A) of the Act. The AO accordingly raised a demand u/s.201(1)(1A) of the Act aggregating to ₹35,57,540/- vide order dated 28.11.2019.

Being aggrieved by the said assessment order, the assessee preferred an appeal before the Ld. Commissioner of Income-tax (Appeals). The Ld. CIT(A), while passing the ex-parte order without deciding the case on merit, confirmed the demand raised by the Assessing Officer.

After hearing the rival contentions and perusing the material on record including the submissions filed by the assessee, we note that the assessee was provided the advisory and consultative services only as stated hereinabove and there was no involvement of transfer of technical knowhow. It is seen that the assessee was not made available any technical knowhow so that the same could be used by the assessee independently in future. The services of UAE company were confined to supervisory and co