Sections 9, 195 of the Act – Fees paid to surveyors for assessing damage was not taxable in India since the surveyors had undertaken work outside India and had merely provided their report without imparting any knowledge to the Taxpayer

8. [2018] 97 taxmann.com 644 (Chennai – Trib.)

Royal Sundaram Alliance Insurance Co. Ltd. vs. DCIT

ITA Nos.: 1622 to 1630 (Chny) of 2011

Date of Order: 6^th August, 2018

A.Ys.: 2002-03 TO 2010-11

Sections 9, 195 of the Act – Fees paid to surveyors for assessing
damage was not taxable in India since the surveyors had undertaken work outside
India and had merely provided their report without imparting any knowledge to
the Taxpayer 

Facts

The Taxpayer was engaged in the
business of general insurance in India. The Taxpayer had engaged surveyors to
assess loss or damage to goods insured by it in transit to foreign country.
During the relevant year, the Taxpayer paid fees to the surveyors for such
assessment. The surveyors had assessed the damages outside India using their
experience and knowledge and furnished their report to the Taxpayer. The
Taxpayer contended that such income is not taxable in India and hence, it did
not withhold tax from the fees paid to surveyors.

In the course of assessment, the AO
disallowed the payment.

Held

•    The surveyors were
  non-residents. They had undertaken the assessment of damage outside India using
  their experience and knowledge.

•    The surveyors had not
  imparted their knowledge to the Taxpayer and had merely provided a report of
  the extent of damage to the Taxpayer so as to enable it to compensate its
  customers.

•    Accordingly, the payment
  made by the Taxpayer to the surveyors was not chargeable to tax in India.
  Consequently, the Taxpayer was not required to withhold tax from such payment.