SHELL INTERNATIONAL PETROLEUM COMPANY LTD.,MUMBAI vs. DCIT (IT) 4(2)(1), MUMBAI

2. The assessee in all these appeals also raised an additional ground on the legal issue that the final assessment order of the AO is barred by limitation by placing reliance on the decision of the Hon'ble Madras High Court in the case of CIT vs. Roca Bathroom Products (P) Ltd. (2022) 445 ITR 537 (Mad.). However, during the course of hearing, the ld. AR did not press for the admission of the additional ground and accordingly the same is not admitted for adjudication.

ITA No.7499/Mum/2019 – AY 2016-17

3. The assessee is a Shell Group Company incorporated in UK and it is in the business of providing consultancy services to various Shell operating company. The assessee has entered into Cost Contribution Agreement (CCA) with various Shell concerns including Shell India Markets Pvt. Ltd. (SIMPL) for the provision of Business Support Services (BSS). The BSS are primarily in the nature of Management Support Services and the cost incurred towards rendering of such services is allocated among Shell Group concerns using the allocation key on a cost to cost basis. The AO held the BSS Arrangement as Fees for Technical Services (FTS) in the hands of the assessee and accordingly brought the same to tax. The AO in this regard placed reliance on the Ruling of Authority for Advance Ruling (AAR) in the case of SIMPL (application no. 833 of 2009 dated 17.01.2012). The AO further treated the amount received by the assessee towards usage charges of SUN Maintenance Software treating the same as royalty. The AO also treated the receipt towards cost allocation for GSAP license and Go-Live 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. application as royalty. The assessee raised further objections against the draft assessment order of the AO, before the DRP who confirmed the addition made by the AO towards BSS services based on the AAR Ruling. The DRP also confirmed the treatment of usage charges of SUN Maintenance Software and treatment of cost allocation for GSAP license and Go-Live application as royalty. The assessee is in appeal before the Tribunal against the final order of assessment passed by the AO as per the directions of the DRP.

Treatment of BSS as FTS

11. Pursuant to the said ruling SIMPL had filed a Writ Petition before the Hon'ble Jurisdictional High Court challenging the validity and legality of the order passed by the Hon’ble AAR and the Hon'ble High Court (in Writ Petition No. 10788 of 2012 vide order dated 01.03.2024), quashed the order of the Hon’ble AAR as being not sustainable by law and by holding that the payment received by the assessee from SIMPL is not in the nature of ‘fee for technical service’ and further held that the services are in the nature of managerial service and not technical service which are made available. The 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. relevant extract of the said decision is cited herein under for ease of reference: 15. Be that as it may, the crux of the matter lies in ascertaining whether the finding of the AAR that services availed by Petitioner from SIPCL or payments made by Petitioner to SIPCL are of/for ‘technical/’consultation’ services and secondly, whether such services are ‘made available’ to Petitioner. Article 13 of DTAA reads as under: “ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

16. From the bare words of the Article, it is clear that income of Shivgan SIPCL will be chargeable to tax in India only if the payment by Petitioner is towards fees for ‘technical services’. Under Article 13(4), the term ‘fees for technical services’ means payments of any kind in consideration for the rendering of any technical or consultancy services. Sub-para (c) to Article 13(4) further restricts the meaning of the term to only that which makes available technical knowledge, experience, skill, know-how or processes, or consists of the development or transfer of a technical plan or technical design.

1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd.

18. The Appendix 2 of CCA contains the General BSS. The list of services availed are as follows: EXAMPLES OF GENERAL BUSINESS SUPPORT SERVICES: •Management Support • Development and Provisions of Support and Business Tools • Provision of Marketing Support. • Development, Communication and Audit of Standards of • Performance Promotion of Professional Competence • Information Technology Advice and Services • General Financial Advice and Services • Taxation Advice and Services • Legal Services • Employee Relations and Public Affairs/Media Advice and Services • HR Advice and Services• Contracting and Procurement Services • Other Business Support Services A perusal of the list of services relate to managerial services not involving anything of a technical nature. The AAR has discussed the services appearing in the CCA and has concluded that these activities in a retail business are at the core of retail marketing and hence advice tendered in taking a decision of commercial nature is a consultancy service. The AAR has further considered the definition of the word ‘Consultancy’ as defined in the Oxford English dictionary and has observed that a consultant is a person who gives professional advice or services in a specialized field. However, the AAR failed to appreciate that the word ‘Consultancy’ appearing in the Article is to be interpreted in the context of consultancy which makes available technical knowledge, etc. and not of managerial nature. The reading of the Article clearly indicates that the consultancy service must be which makes available technical knowledge, etc. Sub-para (c) to Article 13(4) restricts such services to those which make available technical knowledge or consist of development and transfer of a technical plan or technical design. Thus, a harmonious reading of the provision of Article 13 in its entirety, clearly establishes the intent of the DTAA in making income chargeable to tax only if the services availed pertain to technical services or consultancy services. Technical services in this context mean services requiring expertise in a technology. By Consultancy Services, in this context, would mean advisory services. The categories of technical and consultancy services are to some extent, overlapping. Under paragraph 4, technical and consultancy services are considered included services only to the following extent: (1) as described in paragraph 4(a), if they are ancillary and subsidiary to the application or enjoyment of a 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. right, property or information for which a payment described in paragraph (3)(a) of Article 13 is received; (2) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph (3)(b) of Article 13 is received; or (3) as described in paragraph 4(c), if they make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design. Thus, under paragraph 4(c), consultancy services which are not of a technical nature cannot be included services. Thus, the services availed by Petitioner cannot be said to be technical services and Article 13 is wholly inapplicable in the facts and circumstances of the present case.

19. It will be useful to refer to a decision of the Madras High Court in the case of Skycell Communications Ltd and Anr. v. Deputy Commissioner of Income-Tax and Ors.8 which held as follows: “8. Thus while stating that "technical service" would include managerial and consultancy service, the Legislature has not set out with precision as to what would constitute "technical" service to render it "technical service". The meaning of the word "technical" as given in the New Oxford Dictionary is adjective 1. of or relating to a particular subject, art or craft or its techniques : technical terms (especially of a book or article) requiring special knowledge to be understood : a technical report. 2. of involving, or concerned with applied and industrial sciences : an important technical achievement. 3. resulting from mechanical failure : a technical fault. 4. according to a strict application or interpretation of the law or the rules : the arrest was a technical violation of the treaty.

9. Having regard to the fact that the term is required to be understood in the context in which it is used, "fee for technical services" could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with "technical" is "involving or concerning applied and industrial science".

10. In the modern day world, almost every facet of one's life is linked to science and technology inasmuch as numerous things used or relied 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. upon in every day life is the result of scientific and technological development. Every instrument or gadget that is used to make life easier is the result of scientific invention or development and involves the use of technology. On that score, every provider of every instrument or facility used by a person cannot be regarded as providing technical service.

11. When a person hires a taxi to move from one place to another, he uses a product of science and technology, viz., an automobile. It cannot on that ground be said that the taxi driver who controls the vehicle, and monitors its movement is rendering a technical service to the person who uses the automobile. Similarly, when a person travels by train or in an aeroplane, it cannot be said that the railways or airlines is rendering a technical service to the passenger and, therefore, the passenger is under an obligation to deduct tax at source on the payments made to the railway or the airline for having used it for travelling from one destination to another. When a person travels by bus, it cannot be said that the undertaking which owns the bus service is rendering technical service to the passenger and, therefore, the passenger must deduct tax at source on the payment made to the bus service provider, for having used the bus. The electricity supplied to a consumer cannot, on the ground that generators are used to generate electricity, transmission lines to carry the power, transformers to regulate the flow of current, meters to measure the consumption, be regarded as amounting to provision of technical services to the consumer resulting in the consumer having to deduct tax at source on the payment made for the power consumed and remit the same to the Revenue. 15.The use of the internet and the world wide web is increasing by leaps and bounds, and there are hundreds of thousands, if not millions, of subscribers to that facility. The internet is very much a product of technology, and without the sophisticated equipment installed by the internet service providers and the use of the telephone fixed or mobile through which the connection is established, the service cannot be provided. However, on that score, every subscriber of the internet service provider cannot be regarded as having entered into a contract for availing of technical services from the provider of the internet service, and such subscriber regarded as being obliged to deduct tax at source on the payment made to the internet service provider.

20. Thus, it is clear from the said decision that any service is construable as technical but one has to see the true import of the service actually rendered and the determination must be made in this context. There is no 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. such discussion in the Impugned order and the finding is based on a generic reference to the meaning of the word 'consultancy' as given in the Oxford English Dictionary. The AAR further holds that the list of services mentioned in the CCA is not an exhaustive list and may include other technical services. Thus Petitioner is correct in contending that the AAR has proceeded on conjectures and surmises to render the finding in the impugned order.

21. The AAR has further held that the services are made available to Petitioner since while providing General BSS, SIPCL works closely with the employees of the applicant and supports/advises them. It is held that Petitioner is able to use the know how/intellectual property generated from the General BSS independent of the service provider and hence the services under the agreement are clearly made available to Petitioner. In order to understand the import of the words 'made available' as used in the context of Article 13(4)(c), it will be useful to refer to a decision of the Karnataka High Court in CIT, Central Circle v. De Beers (Supra). Paragraph 22 reads as follows: “22. What is the meaning of “make available”. The technical or consultancy service rendered should be of such a nature that it “makes available” to the recipient technical knowledge, knowhow and the like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology "make available", the technical knowledge, skill?, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. 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 that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. In other words, payment of 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. consideration would be regarded as "fee for technical/included services" only if the twin test of rendering services and making technical knowledge available at the same time is satisfied.” (emphasis supplied) 22. Similarly, the Delhi High Court in the CIT (International Taxation)-1, Delhi v. M/s Biorad (Supra) has discussed the said concept accordingly. Paragraphs 14 and 15 read as under: 14. According to the Tribunal, the agreement between the respondent/assessee and its Indian affiliate had been effective from 01.01.2010, and if, as contended by the appellant/revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period. 14.1 Notably, this aspect is adverted to in paragraphs 17 to 23 of the impugned order. For convenience, the relevant paragraphs are extracted hereafter: “17. A perusal of the aforementioned provision shows that in order to qualify as FTS, the services rendered ought to satisfy the ‘make available’ test. Therefore, in our considered opinion, in order to bring the alleged managerial services within the ambit of FTS under the India-Singapore DTAA, the services would have to satisfy the ‘make available’ test and such services should enable the person acquiring the services to apply the technology contained therein. “18. As mentioned elsewhere, the agreement is effective from 01.01.2010 and we are in Assessment Years 2018-19 and 2019- 120.[sic…..20]. In our considered opinion, if the assessee had enabled the service recipient to apply the technology on its own, then why would the service recipient require such service year after year every year since 2010? 19. This undisputed fact in itself demolishes the action of the Assessing Officer/DRP. Facts on record show that the recipient of the services is not enabled to provide the same service without recourse to the service provider, i.e, the assessee.

12. From the above it is observed that the Hon'ble High Court has categorically held that the services rendered by the assessee are not in the nature of technical service and are merely managerial in nature, though in the case of SIMPL, the same has a binding effect on the assessee for the reason that it arises out of the same CCA for availing General BSS. As the ruling of Hon’ble AAR holding that the same is liable to be taxed in India as ‘fee for technical service’ has been reversed by the Hon'ble High Court, we find no reason to uphold the order of the ld. A.O. who in fact has relied on the Hon’be AAR’s ruling to decide the issue in hand. We, therefore, deem it fit to allow the grounds of appeal raised by the assessee. As the issue relating to permanent establishment of the assessee is not specifically raised before us by both the sides in the grounds of appeal, except for the arguments enhanced by the ld. DR at the time of hearing, we decline to adjudicate on the same.”

5. We notice that for the year under consideration also the revenue has placed reliance on the decision of the AAR in the case of SIMPL to hold that the receipts towards BSS is to be treated as FTS in the hands of the assessee which has not been reversed by the Hon'ble Jurisdictional High Court. Since the BSS rendered by the assessee is arising out of the same CCA as in the case of SIMPL, we are of the 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. view that the decision of the Hon'ble High Court has a binding precedence in assessee's case also. Further the facts for the year under consideration are identical to AY 2009-10 and the revenue did not bring anything on record to controvert the same. Therefore in our considered view the above decision of the Co-ordinate Bench on the impugned issue is applicable for the year under consideration also. Accordingly, we direct the AO to delete the addition made towards BSS in the hands of the assessee. Ground No.3 & 4 of the assessee raised in this regard are allowed. Ground No.2 has become academic in view of our decision on Ground No.3 & 4.

Treatment of access & cost allocation towards SUN software and SAP / GSAP software application Royalty 6. We heard the parties and perused the material on record. At the outset the ld AR submitted that the issue is identical to the issue contended in AY 2012-13 and that the coordinate bench has held the issue in favour of the assessee. We notice in this regard the below observations of the coordinate bench in assessee's own case for AY 2012-13 vide order dated 27.02.2025 -

1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd.

7. The Tribunal considering the provisions of the IT Act, as also the position in law as laid down in various decisions has observed that the assessee had made purchases of computer software from the residents of Denmark and Finland. It was observed that such purchases would fall within the provisions of the Double Taxation Avoidance Agreement ("DTAA") entered between India and these countries. The Tribunal also observed that a co-ordinate Bench of the Tribunal in the assessee's own case in ITAS No.2529/Mum/2008 and ITAS No.4587/Mum/ 2010 had held that in such cases similar remittances made to the residents of Germany and France, were held to be not liable for deduction of tax at source. The Tribunal, following the decision of its co-ordinate Bench, in assessee's own case, dismissed the appeal filed by the Revenue by the impugned order.

8. At the outset, Learned Counsel for the parties would fairly state that the question of law as raised in the present appeals, is no more res integra in view of the authoritative pronouncement of the Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd. v. CIT [2021] 125 taxmann.com 42/281 Taxman 19/432 ITR 471 In the said case the Assessing Officer, applying Article 12(3) of the DTAA entered between India and U.S.A. as also the provisions of Section 9(1)(vi) of the IT Act to the transaction between the parties, held that the transaction involved copyright, which attracted the payment of royalty and accordingly, tax was required to be deducted at source by the Indian importer. Since this was not done, it was held that the assessee was liable to make good the payment of TDS which it had not deducted. Also interest under Section 201(1)(A) of the Act was levied. The Appeal before the Commissioner was also dismissed.

9. In these circumstances, the proceedings had reached the Tribunal at the instance of the assessee. The assessee succeeded in these proceedings, with the ITAT setting aside the concurrent findings of both the authorities below. On such backdrop, the proceedings reached the High Court 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd.

12. In the aforesaid circumstances, it is clear that the approach of the Assessing Officer in the present case was against the correct position in law as held by the Tribunal, and now also endorsed by the Supreme Court in Engineering Analysis Centre of Excellence (P) Ltd (supra). In this view of the matter, we are in agreement with Mr. Madhur Agarwal that these four Appeals would not give rise to the question of law as noted by us hereinabove.”

8. In assessee's case the payments are made towards cost allocation of of SUN Maintenance Software and GSAP maintenance charges therefore we are of the view that the ratio laid down by the Hon'ble Supreme Court and the Jurisdictional High Court are applicable to assessee also. Therefore respectfully following the said decisions we hold that the amount received towards cost allocation of SUN Maintenance Software and GSAP maintenance charges cannot be treated as royalty and the addition made in this regard is not sustainable. Ground No.6,7 & 9 raised by the assessee in this regard are allowed. Ground No.5 & 8 on the same issue has become academic and left open. 7. The facts for the year under consideration being identical, respectfully following the above decision we hold that the amount received towards access & cost allocation towards SUN software and SAP / GSAP software application cannot be treated as royalty and the addition made in this regard is not sustainable.

1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. Ground No.6 to 8 & 10 to 12 raised by the assessee are allowed and Ground No.5 & 9 are left open.

Treatment of cost allocations in respect of SUN / GSAP maintenance charges do not qualify as FTS

9. The ld AR submitted that Article 13(4)(a) of the DTAA provides that fees for technical services means payment to any person in consideration for rendering of any technical or consultancy services which are ‘ancillary and subsidiary’ to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received. The ld AR further submitted that article 13(4)(a) of the DTAA can only be invoked when there is a payment which is chargeable to tax under article 13(3)(a) as royalty and further payment is made for technical or consultancy services which are ancillary and subsidiary to such royalty. The ld AR accordingly submitted that if there is no payment which is 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. chargeable to tax as royalty under article 13 (3)(a) of the DTAA, question of applicability of article 13(4)(a) would not arise. The ld AR argued that in assessee's case it has already been held that the receipt for giving access to software is not in the nature of royalty as defined in Article 13(3) of the DTAA and, therefore, the receipt for providing maintenance services cannot be treated as FTS under article 13(4)(a) of the DTAA. With respect to the alternate contention of the Revenue that receipt for maintenance services are akin to BSS and therefore, chargeable to tax under article 13(4)(c) of the DTAA, it is submitted that it has been held by the Hon’ble High Court and the co-ordinate bench of the Tribunal that BSS is not taxable as FTS as it does not fulfil the criteria of “make available technical knowledge, experience, skill, know how or processes.”. It therefore further submitted that as it is the case of the AO/ DRP that the fact for providing maintenance services is identical to providing BSS, the decision on taxability of BSS would equally apply to this as ground as well.

10. We heard the parties and perused the material on record. Before proceeding further we will once again have a look at Article 13(4) which according to the AO is applicable for receipts towards SUN / GSAP Maintenance charges –

“ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. to 2.*** 3. For the purposes of this Article, the term "royalties" means: (a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work, including cinematograph films or work on films, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trademark, design or model, plan, secret 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. formula or process, or for information concerning industrial, commercial or scientific experience; and (b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic 4. For the purposes of paragraph (2) of this Article, and subject to paragraph (5), of this Article, the term "fees for technical services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including the provisions of services of technical or other personnel) which: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph (3)(a) of this Article is received; or (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph (3)(b) of this Article is received; or (c) make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design.”

11. A combined perusal of the clause (3) and (4) of Article 13 makes it clear that for the purpose of receipt to fall within the purview of FTS, it should be ancillary and subsidiary to the application or enjoyment of the right, property or information which is Royalty within clause (3). In assessee's case the impugned receipts are towards maintenance of the SUN/GSAP applications. We have while considering the issue of SUN / GSAP application charges being treated as Royalty, have already held that the said receipts are not in the nature of Royalty by following the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd.(supra). Accordingly the receipts towards maintenance of the SUN / GSAP application in our considered view will not fall within the purview of clause (4) of Article 13. Therefore the revenue's contention 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. that the receipt towards maintenance is FTS in nature is not tenable. Further from the perusal of DRP order we notice that the DRP has observed that the nature of receipts are similar to BSS receipts which we have already held does not fall within FTS since the same does not make available technical knowledge, experience, skill, know-how or processes. Therefore on that count also we are of the view that the revenue's contention is not sustainable. Accordingly we direct the AO to delete the addition made towards SUN / GSAP maintenance charges treating the same as FTS. Ground No.14 to 16 raised by the assessee are allowed and in view of the same Ground No.13 has become academic not warranting any adjudication.

Treatment of cost allocations in respect of GTAS product costs as FTS

12. The ld AR submitted that reimbursement received by the assessee is reversed in subsequent year i.e., AY 2017-18 and therefore there cannot be any addition towards said receipts during the year under consideration. The ld AR made an alternate submission that if addition is made in the current year, then a corresponding deduction is to be allowed in AY 2017-18.Therefore, the ld AR submitted that although the assessee has a good case to argue on merits, the assessee does not wish to press the ground. Accordingly the Ground No.18 & 19 are dismissed as not pressed considering the reasons stated herein above. Ground No.17 has become academic and left open.

Treatment of cost allocations in respect of GST scoping charges as FTS

10. We heard the parties and perused the record. The assessee during the year under consideration has migrated to GSAP Software and has incurred expenses towards procurement of licence to use the Software also expenses towards customization of the Software for Go-live. These expenses have been allocated across the group on a cost to cost basis based on the number of users. The contention of the AO is that the amount received by the assessee is in the nature of Royalty as per explanation-4 to section 9(1)(vi) of the Act. The argument of the assessee is that the amendment to section 9(1)(vi) cannot be read into the DTAA and thus the provisions as per DTAA which is more beneficial to the assessee should only be applied in assessee's case as per section 90(2) of the Act. In this regard it is relevant to consider the following observations of the Hon'ble Supreme Court in the case of Engineering Analysis (supra) – 100. Also, any ruling on the more expansive language contained in the explanations to section of the Income-tax Act would have to be ignored if it is wider and less beneficial to the assessee than the definition contained in the 1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. DTAA, as per section 90(2) of the Income-tax Act read with explanation 4 thereof, and Article 3(2) of the DTAA. Further, the expression "copyright" has to be understood in the context of the statute which deals with it, it being accepted that municipal laws which apply in the Contracting States must be applied unless there is any repugnancy to the terms of the DTAA. For all these reasons, the determination of the AAR in Citrix Systems Asia Pacific Pty Ltd. (supra) does not state the law correctly and is the aside.

1244/M/ 21, 995 & 2307/M/ 22 & 3317/M/ 23 M/s Shell International Petroleum Co. Ltd. 11, 12, 14 & 15 are allowed. Ground No. 10 & 13 are left open in view of our decision in Ground No. 11, 12, 14 & 15.

17. In view of these discussions, we hold that the treatment of GST scoping / customisation receipts as FTS is not correct and the addition made in this regard is liable to be deleted. Ground No.21 to 23 are allowed and Ground No.20 has become academic.

Treatment cost allocations in respect of IT service and local project costs as FTS

20. Ground No. 28 pertaining to interest under section 234B of the Act is consequential not warranting any separate adjudication.

21. In result, the appeal for AY 2016-17 is partly allowed.