DEPUTY COMMISSIONER OF INCOME TAX, GURGAON V. HAYS BUSINESS SOLUTIONS PRIVATE LIMITED, GURGAON

ITA 3003/DEL/2023

AI Insights

The case revolves around an appeal by the revenue against the order of the CIT(A) which had allowed the deduction of management charges claimed by Hays Business Solutions Private Limited. The primary contention was whether the management services provided by Hays UK to its Indian subsidiary were taxable as 'Fees for Technical Services' (FTS) under the India-UK Double Taxation Avoidance Agreement (DTAA). The revenue argued that the CIT(A) erred in deleting the addition made under sections 37 and 40(a)(ia) of the Income Tax Act, 1961, due to the absence of documentary evidence and non-deduction of TDS. The Tribunal, however, found that the services were managerial and not technical, thus not falling under the ambit of FTS, and upheld the CIT(A)'s decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396673 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: Steria (India) Ltd. v. CIT, Ernst & Young (P) Ltd., In re, Bharti AXA General Insurance Co. Ltd., In re, Invensys Systems Inc. vs DIT, US Technology Resources Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTHA
• Assessee Lawyers: ANANYA KAPOOR
• Keywords: Set aside; Business income; Additional evidence; Revenue expenditure; Transfer pricing; TDS; Advance ruling; Wholly owned subsidiary; Double taxation relief; Permanent establishment; Non-deduction of tax
• Section: 143(3); 37; 37(1); 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.3003/Del/2023 (ASSESSMENT YEAR 2014-15) DCIT, Circle-1(1), Gurgaon Vs. Hays Business Solutions Private Limited, 11th Floor, Building No. 9B, DLF Cyber City, Gurgaon, Haryana-122002 PAN-AACCH1976M (Appellant) (Respondent) Assessee by Ms. Ananya Kapoor, Adv. Department by Shri Rajesh Kumar Dhanestha, Sr. DR Date of Hearing 27/03/2025 Date of Pronouncement 29/05/2025 O R D E R PER MANISH AGARWAL, AM: This is an appeal filed by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-43, New Delhi [Ld. CIT(A), in short], dated 16.06.2023 in appeal No. 10914/2016-17 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) for Assessment Year 2014-15 arising out of the assessment order dt.28.11.2016 passed u/s 143(3)/144C of the Act. 2. Brief facts of the case are that assessee is a wholly owned subsidiary of Hays International Holding Limited, United Kingdom (UK) and is engaged in providing back office support services inter-alia including BPO, knowledge support, and l T support for its Associated Enterprises (\"AEs\" or \"client\"). The assessee is remunerated by its AEs on a cost-plus mark-up basis. The total cost incurred by the Appellant is charged back from AEs at cost plus 20% margin and the same is offered to tax under the provisions of the Act. The assessee filed 2 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. its return of income for the year under appeal on 28.11.2014 declaring total income of Rs. 9,80,92,733/-. Thereafter, the DCIT, Circle 2, Gurgaon (the AO, in short) issued notice u/s 143(2) of the Act. AO further issued various notices and questionnaires which were duly replied by assessee and relevant documents were filed from time to time. Ld. AO passed the assessment order on 28.11.2016 u/s 143(3) /144C of the Act and assessed the income of the assessee at Rs.13,29,49,326/- by making disallowance of Rs. 3,48,56,596/- out of management charges paid by the assessee to its AE. Against this order, the assessee has filed an appeal before the Ld. CIT(A) who vide impugned order has allowed the appeal of the assessee. Therefore, the Revenue is in appeal before the Tribunal on the strength of following grounds of appeal: “(i) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.3,48,56,596/- made u/s 37, claimed an account of management fees when the assessee failed to submit documentary evidence in respect of such transactions? (ii) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.3,48,56,596/- u/s 40(a)(ia) of the Act claimed on account of management fees, in absence of deduction of TDS ?” 3. In both the grounds of appeal, the Revenue has challenged the action of ld. CIT(A) in deleting the disallowance of Rs.3,48,56596/- made u/s 37 of the Act in absence of any documentary evidences and further u/s 40(a)(ia) of the Act for non-deduction of tax at source. 4. Before us, the Ld. Sr. DR submitted that the Assessing Officer has ask the assessee to file the necessary details to established the management services tendered by the AE. He further submitted that if the AE has provided services to the assessee then it must be supported by the sufficient evidence in the shape of bills, etc. and merely by filling the agreement, it could not be said that services were provided or services were actually taken by the assessee from its AE. He further submitted that assessee has failed to deduct TDS on the amount of payment made to the AE towards management services whereas the payment made to the non-resident are under the preview of Article 13 of the DTAA. Hence, 3 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. the tax needs to be deducted as per the provisions of section 195(1) of the Act. According to ld. Sr. DR, the assessee had failed to deduct the TDS, therefore, management fee claimed by the assessee as expenses should have been disallowed under Section 40(a)(ia) of the Act. Ld. Sr. DR finally submitted that ld. CIT(A) has failed to appreciate these facts and by accepting the details filled by the assessee during the course of appellate proceedings, has allowed the deduction. He, therefore, prayed to uphold the order of the AO. In the alternative, ld. Sr. DR prayed that the matter be set aside to the file of AO for making necessary verifications of the details filed by the assessee before the ld. CIT(A). 5. On the other hand, Ld. AR of the assessee supports the order of Ld. CIT(A) and submits that the support services provided by Hays UK are internal organization support services that are advantageous for the entire group including the assessee. In case the assessee has not taken the services from its AE, these function would have to be performed by the assessee itself or to be availed from other third party vendor as these secondary functions are important for carrying out the business. Therefore, the management expenses were fully and exclusively incurred for the purpose of business and under business exigencies and therefore, deserves to be allowed u/s 37(1) of the Act. It is further submitted by ld. AR that copy of management service agreement, account ledgers, relevant invoices and transfer pricing study report were filed before the AO during the course of assessment proceedings containing the details of nature of service and computation mechanism for compensation paid to AE for services rendered by it. Before ld. CIT(A) assessee also filed additional evidences U/R 46A which includes (a) Hays UK Transfer Pricing document report along with annexures including calculation of management charges for the year ended on 31st March, 2014 and (b) email correspondence substantiating the fact that the services were rendered by it AE at UK. Ld. AR thus submitted that assessee had filed every plausible evidence to establish that the services were actually rendered. 4 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. 6. Regarding TDS, it is submitted by ld. AR that the AO has failed to appreciate the fact that while holding that managing service paid to its AE fee for technical services chargeable to tax under Article 13 of India UK Tax Treaty as services are made available to the assessee and the disallowance u/s 40(a)(ia) cannot be made because the payment is not taxable under India-UK DTAA and in view of the provision of section 90(2) of the act, it is not taxable at all. Hence the assessee was not required to deduct TDS while making payment of management charges. The ld. AR further filed detailed written submission which is as under: “Management fee is not 'Fee for Technical Services' as per the provision of the Act read with India-UK Tax Treaty:  Hays UK, being a tax resident of UK, is entitled to avail beneficial provisions of the India UK Tax Treaty. The taxability of the management fee in the hands of Hays UK under Article 13 of the India UK Tax Treaty being more beneficial to the Assessee is analysed below: Taxability of management fee as per the provisions of India UK Tax treaty:  As per Article 13(4)(c) of India UK Tax Treaty, services will fall within the category of technical services, if the following conditions are satisfied cumulatively:  The services are technical or consultancy services; and  The services \"make available\" technical knowledge, skill, experience, etc. or consist of the development and transfer of a technical plan or design. Managerial services are not fee for technical services under India UK Tax Treaty  It is pertinent to note that any consideration received for provision of managerial services are not covered within the scope of fees for technical services as envisaged in India UK tax treaty. Managerial Services  The term managerial services have been discussed in several judicial precedents and the broad principles emanating therefrom are discussed hereunder:  The term 'managerial' relates to 'manager' or 'management'. Further, a 'manager' is a person who manages an industry or business or who deals with administration or a person who organizes other people's activity!  'Managerial service' essentially involves controlling, directing or administering the business. When one talks of rendering 'managerial services in relation to some activity, it is the management of such overall activity. Doing bits or small parts of overall activity independently here and there cannot be considered as rendering of a 'managerial service' in relation to such activity.  In the present case, Hays UK provides advice and assistance to the Assessee on number of important secondary business activities and group functions such as accounting, finance, business planning and strategy, IT, legal and marketing with a view to achieve uniformity and standardization at group level. The services rendered by Hays UK comes under the broad category of General Management Services and thus these managerial services are not covered within the ambit of FTS as defined under Article 13 of India UK Tax Treaty.  Reliance in this regard is placed on the ruling of the Hon'ble Delhi High Court in the case of Steria (India) Ltd. v. CIT (2016) 386 ITR 390 wherein the HC has held 5 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. that the services rendered by the non-resident to the assessee were managerial services which is outside the ambit of FTS occurring in article 13(4) of the India UK tax treaty. Therefore, the question of the assessee having to deduct tax at source from payments for the managerial services, would not arise. The relevant extract of the ruling is reproduced below: \"19. The next question that arises is concerning to extent to which the benefit under the India-UK DTAA can be made available to the Petitioner. As already noticed, the definition of \"fee for technical services\" occurring in Article 13(4) of the Indo-UK DTAA clearly excludes managerial services. What is being provided by Steria France to the Petitioner in terms of the Management Services Agreement is managerial services. It is plain that once the expression 'managerial services' is outside the ambit of 'fee for technical services', then the question of the Petitioner having to deduct tax at source from payment for the managerial services, would not arise, It is therefore, not necessary for the Court to further examine the second part of the definition, viz., whether any of the services envisaged under Article 13(4) of the Indo-UK DTAA are \"made available\" to the Petitioner by the DTAA with France.\" (Emphasis supplied)  In view of the above, the Ld, AO has erroneously considered managerial services provided by Hays UK as technical or consultancy services as covered under Article 13(4) of the India UK treaty and accordingly held the same as chargeable to tax India,  Without prejudice to anything stated above, in order to categorize a service as \"fee for technical services\", such services inter alia should make available technology knowledge to the service recipient.  In this regard, reference may be drawn to Memorandum of Understanding ('MOU') entered into by India with United States of America, where in the term 'make available' has been explained by the administrators. Relevant text of the MOU is quoted below: \"........technology will be considered \"made available\" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skills etc. are made available to the person purchasing the service, within the meaning of paragraph 4(b)....\"  From the perusal of above explanation provided by the MOU, it may be appreciated that onshore services could be categorized as fee for technical services, only if it makes available technical knowledge, experience, skill, know- how or processes to the service recipient. The receiver of the services can be said to acquire the relevant skills used by the service provider only if he acquires those skills in such a way that he can himself use or apply them independently without getting any assistance or being dependent on the service provider in future.  In the present case, management services provided to the Assessee are not made available basis the following facts:  Merely assistance, advices, information, etc. on various business and commercial matters, guidelines, templates, best practices and strategies are provided so that the same could be adopted in various spheres of the Assessee business. Availing these services ultimately lead to protection of Hays Group image and client relations.  Services are general management services provided regularly to ensure quality of services as the Assessee is working as back office for its AEs and thus standardization of functions is required for maintaining quality of services to the clients.  It is, therefore, respectfully submitted that the payment of management fees would not fall within the purview of fees for technical services under the relevant 6 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. provisions of tax treaty as the provision of the management services do not make available the technical knowledge, skills, etc. to the Assessee and hence, it is not chargeable to tax in India under the provisions of the Act read with India-UK tax treaty.  Reliance in this regard is placed on the ruling of Authority for Advance Ruling in the case of Ernst & Young (P) ltd., In re (323 ITR 184) wherein it has been held that management services which do not make available technical knowledge, skill to the service recipient and therefore, will not fall within the definition of FTS under India-UK tax treaty, The relevant extract is reproduced herein below: \"8. First of all, some of the services enumerated above have the flavour of management services. Services of managerial nature are not included within art. 13 unlike many other treaties. Only technical and consultancy services are included. Many of them do answer that description However, the more important question is whether EMEIA, UK has made available to the applicant any technical knowledge, experience, skills or know-how by providing the support services' noted above. In our view, that question admits only of an answer in the negative. What all is provided by EMEIA is informations on various business and commercial matters, guidelines, templates, best practices and strategies that could be adopted in various spheres of their business which ultimately lead to protection of EY image and client relations. Dissemination of informations, furnishing guidelines and suggesting plans of action aimed at uniformity and seamless quality in business dealings of participating group entities do not per se amount to making available to them technical knowledge and experience possessed by EMEIA to a substantial extent. There is no transfer of technical know-how in that process nor cat it be said that the recipient of these coordinated/centralized services has been enabled to apply the technology which EMEIA is possessed of. In fact, EMEIA has not developed any technology of its own nor does it innovate anything. (Emphasis supplied)\"  Reliance in this regard are also placed on the following judicial precedents, wherein, the term 'make available' has been analysed and explained:  DIT V. Guy Carpenter & Co Ltd (20 taxmann.com 807) (Delhi High Court)  CIT V. De Beers India Minerals Pvt. Ltd. (346 ITR 467) (Karnataka High Court)  Endemol India Private Limited (264 CTR 117) (AAR)  Bharti Axa General Insurance Co. Ltd., In re (326 ITR 477) (AAR Delhi)  Cummins Ltd, In re (381 ITR 44) (AAR Delhi)  Intertek Testing Services India (P) Ltd. (AAR) (307 ITR 418)  Invensys Systems Inc. vs DIT (AAR) (317 ITR 438)  Given the above, the Assessee is not required to withhold tax on payment of management fee which is not chargeable to tax in India. Reliance in this regard is placed on the decision of Hon'ble Supreme Court in case of GE India Technology Centre Private Limited vs CIT (327 ITR 456) wherein it has been held that tax is required to be withheld in case payment is chargeable to tax in India. Our contention also gets support from the Instruction No. 2/2014, Circular 3 of 2015 and F. No. 500/39/2015 dated 26 October 2016 issued by Central Board of Direct Taxes (CBDT).  It is also submitted that the Ld. AO has failed to consider the specific facts of the case while holding merely on surmises that tax was required to be withheld on payment of management fee being fee for technical services (FTS), Basis detailed factual and legal submission discussed above, management fees does not fall within the purview of fees for technical services under the provision of relevant 7 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. Tax Treaty as these services do not make available the technical knowledge, skills, etc. to the Assessee and hence, management fee is not chargeable to tax in India. Accordingly, the Assessee is not required to withhold tax on payment of management fee which is not chargeable to tax in India.  Further, the case law (US Technology Resources Pvt. Ltd.) relied upon by the Ld. AO while disallowing management charges u/s 40(a)(i) has been overruled by the Kerala High Court. The relevant extract of the same is reproduced herein below: \"21 We have already held that the services offered by the US Company would not come under the definition of 'included services' as available under the DTAA and as a consequence, the remuneration received by the US Company would not be 'fees for included services. We have to find that the interpretation of the provisions of the DTAA between the Governments of India and USA have not been correctly carried out by the Tribunal. We, hence, set aside the orders of the lower authorities answering the questions of law (iii) and (iv) against the Revenue and in favour of the assessee. In view of the answers already given by us, we are of the opinion that questions of law raised at (v) and (vi) need not be answered. In L. T. A. No. 38 of 2014, the orders are set aside and the AO is directed to consider the claim of expenditure afresh without looking at the application of Section 195(1), which is not applicable. There is no requirement, as found by us, to deduct tax at source. In all the other appeals, the proceedings under Section 201 of the IT Act are set aside.\" 7. Ld. AR heavily placed reliance on the judgement of hon’ble jurisdictional high court in the case of Steria (India) Ltd. Vs. CIT reported in (2016) 386 ITR 390 (Delhi) wherein the Hon’ble High Court has held that the services rendered by the non-resident to the assessee were managerial services which is outside the ambit to FTS occurring in Article 13(4) of India-UK Tax Treaty. Therefore, question of deducting tax at source from payment for the managerial services would not arise. Ld. AR therefore, prayed for the confirmation of the order of ld. CIT(A). 8. We have heard the rival submissions and perused the materials available on record. In the present case, aassessee has entered into an agreement of management service on 01.07.2010 with its AE M/s Hays Plc, UK which is a company incorporated in UK and is a tax resident UK. The company is further entitled to avail beneficial provisions of the Double Taxation Avoidance Agreement (DTAA) entered into between lndia and UK. The assessee had paid total Rs. 3,48,56,596/- towards the management services to its AE in terms of this agreement which were disallowed by the AO by invoking the provisions of 8 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. section 37(1) and 40(a)(ia) of the Act. While deleting the disallowance, the Ld. CIT(A) has made following observations: “4.2.1 The Ld. AR filed the additional evidences u/r 46A which substantiate the claim of management charges paid to Hays UK. The additional evidence was forwarded to the DCIT Circle-2 for obtaining his comments and the remand report. The remand report letter dated 21.06.2017 was received from the DCIT, Circle-2. The AO simply reiterated the finding in the assessment order and objected the admission of additional evidence. I have carefully examined the report of the AO and submission of the appellant. I find the evidences submitted by the Appellant are essential and relevant for adjudication of issues involved in the appeal. I am of the view that for judicious disposal of appeal and in order to meet end of justice. In intend to admit the additional evidences. Accordingly, application for additional evidence filed by Appellant admitted. 4.2.2 It is submitted that from a plain reading of the management services agreement that Hays UK provide advice and assistance to the Appellant on number of important secondary business activities and group functions such as accounting. finance, business planning and strategy. IT. legal and marketing with a view to achieve uniformity and standardization at group level. The Services rendered by Hays UK comes under the broad category of general management services and thus managerial services are not covered under the ambit of FTS as defined under Article 13 of India-UK tax treaty. In its submissions, the appellant has relied upon the judgement passed by Hon'ble Delhi High Court in the case of Steria (India) Ltd. v. CIT (2016) 386 ITR 390 wherein the HC has held that the services rendered by the non-resident to the assessee were managerial services which is outside the ambit of FTS occurring in article 13(4) of the India UK tax treaty. Therefore, the question of the assessee having to deduct tax at source from payments for the managerial services. would not arise. The relevant extract of the ruling is reproduced below: \"19. The next question that arises is concerning to extent to which the benefit under the India-UK DTAA can be made available to the Petitioner. As already noticed, the definition of \"lee for technical services\" occurring in Article 13/4) of the Indo-UK DIAA clearly excludes managerial services. What is being provided by Sterja France to the Petitioner in terms of the Management Services Agreement is managerial services. Itis plain that once the expression managerial services is outside the ambit of tee for technical services, then the question of the Petitioner having to deduct tax at source from payment for the managerial services, would not arise, it is, therefore, nat necessary for the Court to further examine the second part of the definition, viz whether any of the services envisaged under Article 13(4) of the Indo-UK DTAA are made available to the Petitioner by the DIAA with France.\" (Emphasis supplied) 4.2.3 Further the appellant has relied upon the following ruling wherein it was contented that management support services are not technical or consultancy but managerial in nature: a. Ernst and Young (P) Ltd. In re (323 ITR 184) b. Bharti AXA General Insurance Co. Ltd (No. 845 of 2009) c. M/s. Invensys Systems Inc. (317 ITR 438) 4.2.4 On perusal of the above rulings, I find force in the appellant's stand that the services received by it are not technical or consultancy services. The entire focus of the AO that these services are specialized and the same are made available to the appellant. However, the AO has not brought on record either in the assessment order or in the remand report that such services do make available any technical knowledge/ experience/ skill to the service 9 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. recipient. The scope of make available has been extensively discussed in the following judicial decisions relied upon by the Appellant:  DIT V. Guy Carpenter & Co Ltd (20 taxmann.com 807) (Delhi High Court  CIT V. De Beers India Minerals Pvt. Ltd. (346 ITR 467) (Karnataka High Court)  Endemol India Private Limited (264 CTR 117) (AAR)  Cummins Ltd, In re (38) ITR 44) (AAR Delhi)  Intertek Testing Services India (P) Ltd. (AAR) (307 ITR 418) 4.2.5 The Hon'ble Kerala High Court in the matter of US Technology Resources (Pvt) Ltd [2018) (97 laxmann.com 642) held that the payment made by assessee (onindian co.) to a US company for providing management, financial, legal, public relations, treasury and risk management service, is not Fees for Included Services ('FIS') under Article 12 of India-USA DIAA. Further, it was held that:  There was no technology transfer of know-how even on managerial, financial, legal or risk management aspects which would be available to the assessee to be applied without the hands-on advice offered by US company.  The advice offered on managerial, financial, legal or risk management aspects would have to be on a factual basis with respect to the problems arising at various points of time and there cannot be found any transfer of technical or other know- how to the assessee.  In view of the aforesaid facts of the case and the distinct provisions of the tax treaty, the High Court held that none of the aspects on which foreign entity had promised advice to the assessee, would fall under the included services\". Accordingly, the 'fees for included services' would not be taxable in India as per the tax treaty between India and USA in the hands of foreign company. 4.2.6 Further, the AO has relied upon US Technology Resources Pvt. Ltd. relied upon while disallowing management charges u/s 40(a) (i) which has been subsequently overruled by the Kerala High Court which is mentioned supra. The relevant extract of the same is reproduced herein below: \"21 We have already held that the services offered by the US Company would not come under the definition of included services as available under the DTAA and as a consequence, the remuneration received by the US Company would not be fees for included services. We have to find that the interpretation of the provisions of the DIAA between the Governments of India and USA have not been correctly carried out by the Tribunal, We, hence, set aside the orders of the lower authorities answering the questions of law (iii) and (iv) against the Revenue and in favour of the assessee. In view of the answers already given by us, we are of the opinion mat questions of law raised at (v) and (vi) need not be answered, in I.T.A.No.38 of 2014. the orders are set aside and the AO is directed to consider the claim of expenditure afresh without looking at the application of Section 195(1), which is not applicable. There is no requirement, as found by us, to deduct tax at source. In all the other appeal, the proceedings under Section 201 of the IT Act are set aside.” 4.2.7 Based on an examination of the services received by the Appellant and the principles laid down in the above rulings, it is observed that the underlying services are routine in nature and do not enable the appellant to perform the functions on its own in the future. Thus, the make available condition is not satisfied and hence, these services do not qualify as FTS under the tax treaties. 4.2.8 In view of this, it is submitted that no TDS was to be deducted on such payments as the services are not in the nature of FTS. Further, it was pleaded that if such payment is treated as business income under the Act, then also it is cannot be taxed under the treaty, as the payee did not have permanent establishment in India during the year. 10 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. 4.2.9 On careful consideration of the provisions of Section 90(2) of the Act. read with the relevant provisions of India -UK DIAA, I find merit in the plea of the appellant and accordingly. I hold that such payments were not covered within the provisions of section 195. In view of this, no disallowance under section 40(a)(ia) was called for. 4.2.10 in the order, the AO has also disallowed management charges under section 37 of the Act by stating that the appellant did not produce any evidence (except for sample copies of invoices and agreement) to demonstrate that the services had actually been rendered by the AES and how management charges were incurred wholly and exclusively for the business purpose of the Appellant. 4.2.11 During the appellate proceedings, the appellant has submitted detailed submissions and supporting documents in the form of email correspondences as additional evidence. On examination of the same, it is clear that the management services had actually been rendered to the appellant and are incurred for the business purpose of the appellant. Also, it is observed that such services are routine and recurring in nature and qualifies as revenue expenditure. On careful consideration of the above facts and examination of the supporting documents. I find force in the arguments put forward by the appellant in this regard. The AO is not justified in holding that management charges have not been incurred for the business purpose and therefore is not allowable under section 37. Accordingly, the disallowance of management charges under section 37 is deleted. The ground number 2.1, 2.2, 2.3, 2.4 and 2.5 above are allowed.” 9. Before us, the revenue simply contended that the assessee has filed to file any documentary evidences that the services were rendered by the AE. In this regard we find that the assessee not only filed the agreement under which the services were obtained but also filed the copies of the invoices, ledger accounts and email received from time to time about the visits of the personnel of the AE and further evidencing the communication of the job done. All these details were remained uncontroverted by the revenue. Further the Hon’ble jurisdictional High Court in the case of Steria (India) Ltd. (supra) has held as under: \"19. The next question that arises is concerning to extent to which the benefit under the India-UK DTAA can be made available to the Petitioner. As already noticed, the definition of \"fee for technical services\" occurring in Article 13(4) of the Indo-UK DTAA clearly excludes managerial services. What is being provided by Steria France to the Petitioner in terms of the Management Services Agreement is managerial services. It is plain that once the expression 'managerial services' is outside the ambit of 'fee for technical services', then the question of the Petitioner having to deduct tax at source from payment for the managerial services, would not arise, It is therefore, not necessary for the Court to further examine the second part of the definition, viz., whether any of the services envisaged under Article 13(4) of the Indo-UK DTAA are \"made available\" to the Petitioner by the DTAA with France.\" 10. In view of our discussion and further following the judgement of hon’ble jurisdictional high court in case of Steria (India) (supra) on non-deduction of tax on the payment to non-resident of managerial services, we are not inclined to 11 ITA No.3003/Del/2023 DCIT vs. Hays Business Solutions Pvt. Ltd. interfere in the order of the Ld. CIT(A) and same is hereby upheld. Accordingly, the Grounds of Appeal No.1 and 2 of the Revenue are dismissed. 11. As a result, the appeal of the Revenue is dismissed. Order pronounced on 29/5/2025. Sd/- /- ssSd/- s/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated:29/05/2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "