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PER PAWAN SINGH, JUDICIAL MEMBER; 1. This group of three appeal by assessee under Section 253 of Income-tax Act is directed against the separate orders of ld. CIT(A)-55, Mumbai dated 18.09.2017, for Assessment Year 2004-05 to 2006-07 respectively.
In all the appeals the assessee has identical grounds of appeals except variations of figure of additions, thus all the appeals were clubbed, heard and are decided by common order for the sake of convenience and to appeal in appeal for AY 2004-05 are referred below:
(1) The learned CIT(A) erred in confirming the action of the assessing officer in treating the GSA receipts amounting to Rs. 189,243,151 as 'fees for included services' as per Article 12 of the tax treaty between India and USA. (2) Without prejudice to the above ground of appeal
, the learned CIT(A) erred in not directing the assessing officer to apportion and treat as not taxable, some portion of the total receipts towards services, which by their very nature do not make available any technical knowledge, experience, skill, "know-how to the Indian entities (in terms of the tax treaty between India and USA). (3) The learned CIT(A) erred in not adjudicating the ground that ld DCIT erred in computing the interest under section 244A of the Act.
2. Brief facts of the case are that the assessee is a tax resident of USA. The assessee is a group company of AC Neilson Group which is one of world leading business, management and market research companies. The assessee group is represented in India through its two legal entity i.e. AC Neilson Org-Marg Private Ltd (ACNOM) for customised research services and retails measurement services and Act Neilson Research Private Ltd. (ACNRS). During the relevant period for the Assessment Year under consideration, the assessee received Rs. 77679163/- for providing services as contend in General Service Agreement. The Assessing Officer while completing the assessment under section 143(3) on 13.12.2006 treated the said receipt as Royalty under section 9(1)(vi) and Article 12 of India-US Tax Treaty. On appeal, the action of Assessing Officer was confirmed. On further appeal before the Tribunal, the matter was restored back to the file of Assessing Officer in vide order dated 08.08.2014. The Assessing Officer in included service (FIS) as per Article 12(4) of India-US Tax Treaty as well as udder section 9(1)(vi). On further appeal, the action of Assessing Officer was confirmed by ld. CIT(A) in the order impugned before us.
Hence, aggrieved by the order of ld. CIT(A), the assessee are before this Tribunal in second round of appeal. The fact for the Assessment Year 2005-06 & 2006-07 are also based on similar set of facts. 3. At the outset of hearing the ld AR for the assessee submits that the grounds of appeal raised by assessee are covered in favour of assessee by the decision of Tribunal dated 22.05.2019, in assessee’s group case in The Neilson Company US LLC in for Assessment Year 2010-11. The ld. AR of the assessee furnish the copy of decision of Tribunal dated 22.05.2019.
4. On the other hand, the ld. DR for the revenue after going through the contents of decision in assessee’s group case in The Neilson Company US LLC in ITA No. 4362/Mum/2015 for Assessment Year 2010-11 submits that he strongly rely upon the order of lower authorities.
5. We have considered the submission of both the parties and have gone through the orders of lower authorities and the decision of Tribunal in assessee’s group case in The Neilson Company US LLC in ITA No. 4362/Mum/2015 for Assessment Year 2010-11. We have noted that on the similar ground of appeal passed the following order:
We have considered the submission of the parties and have gone through the orders of authorities below. During the assessment the assessee claimed that the receipt from service agreement do not qualify as ‘fee for included services’ as per Article 12 of the India-US DTAA. The assessing officer asked the assessee to provide the service agreement and explain the nature of advisory services. The assessee filed its reply dated 19.12.2013 and also provided the details of the services rendered under the general service agreement. The assessing officer recorded the submissions of the assessee in para 6 of his order. However, the explanation furnished by the assessee was not accepted by the assessing officer. The assessing officer treated the receipt in the nature of fee for included services (FIS). The assessing officer also concluded that FIS has been defined in Article 12(4) of India-US DTAA, according to which the payment in consideration for rendering of any consultancy services, which consist of provision of services for technical or other personnel, if such services inter alia make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design. It was further concluded that Memo of Understanding attached with India-US DTAA, the term ‘make available’ means that the person acquiring the services is enabled to independently apply the technology. The facts that the services are ‘continuous’ does not itself imply that they do not enable the recipient to independently apply the knowledge/ skill that is provided. The word ‘enable’ is used in the sense that the services should be such that they make the recipient able or wiser in the subject matter. The services are continuous to ensure that the knowledge provided and applied by the recipient can be revived for further enabling it to perform its task better.
10. The assessing officer further concluded that Article 12(4)(b) of DTAA between India and USA all the administrative and management 5 to 7218/M/2017 AC Nielsen Corporation support services rendered as per general service agreement in intra group services are with the primary intention to maintain the brand name of assessee and know-how, with the intention of carrying on the business in line with the best practice globally. The entity may not be part of the group but the payment is for the usage of brand name of assessee and hence management support services is in the nature of FIS. The assessing officer also concluded that the advisory services have been used by the Indian entities in the course of their business activities which are utilised for the betterment and improvement of their business model and other practices, which has ultimately reflected in the increase of profitability of Indian entity. The employees of Indian entity are highly qualified and educated. Therefore, the receipt of general service agreement was treated by assessing officer as fee for include services. The assessing officer also relied on the decision of AAR in Perfetti VAN Holding B.V (case No. AAR No.869 of 2010 dated 09.12.2011).
Before ld CIT(A) the assessee filed detailed written submissions as made before us. It was also specifically brought to the notice of ld CIT(A) that the decision rendered by AAR in Perfetti VAN Holding B.V (supra) relied by the assessing officer has already been set aside by Delhi High Court, directing AAR to pass the order afresh. The ld CIT(A) confirmed the order of assessing officer without giving any different finding.
We have also examined the service agreement dated 09.01.2009 between assessee and ACNOM. The assessee has agree to provide the services to ACNOM which we have noted in para 4(supra). We have also perused the provisions of India USA DTAA as notified by the Government of India in Notification No.GSR 990(E), dated 20-12- 1990. Article 12 of DTAA between India and USA deals with royalties and fees for included service. Fee for included service is defined in clause 4 of Article 12 of DTAA. For the purpose of appreciation, clause 4 of Article 12 of the DTAA between India and USA is extracted below:
6 to 7218/M/2017 AC Nielsen Corporation "4. For the purposes of this Article, "fees for included services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services: (a)Are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or (b)Make available technical knowledge, experience, skill, know- how, or processes, or consist of development and transfer of a technical plan or technical design."
13. As per the above definition in DTAA, fees for included services means payment of any kind to any person in consideration for rendering of any technical or consultancy services. We have noted that the term "managerial service" as prescribed in Explanation 2 to section 9(1)(vii) of the Indian Income-tax Act, 1961 is not found in clause 4 of Article 12 of the DTAA between India and USA.
14. For further appreciation of the relevant portion of the Memorandum of Understanding executed between India and USA on 15th May, 1989 is also extracted below: "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 right, property or information for which are royalty payment is made; or (2) as described in paragraph 4(b), 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(b), consultancy services which are not of a technical nature cannot be i Paragraph 4(a) Paragraph 4(a) of Article 12 refers to technical or consultancy services that are ancillary and subsidiary to the application or enjoyment of any right, property, or information for which a payment described in paragraph 3(a) or ( b) is received. Thus, paragraph 4(a) includes a technical and consultancy services that are ancillary and subsidiary to the application or enjoyment of an intangible for which a royalty is received under a licence or sale as described in paragraph 3(a), as well as those ancillary and subsidiary to the application or enjoyment of industrial,
It is understood that, in order for a service fee to be considered "ancillary and subsidiary" to the application or enjoyment of some right, property, or information for which a payment described in paragraph 3(a) or ( b) is received, the service must be related to the application or enjoyment of the right, property, or information. In addition, the clearly predominant purpose of the arrangement under which the payment of the service fee and such other payments are made must be the application or enjoyment of the right, property, or information described in paragraph 3. The question of whether the service is related to the application or enjoyment of right, property, or information described in paragraph 3 and whether the clearly predominant purpose of the arrangement is such application or enjoyment must be determined by reference to the facts and circumstances of each case.
15. From this Memorandum of Understanding, it is obvious that as provided in clause 4(b) of Article 12 of the India USA DTAA, that if the technical or consultancy services made available are technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design are considered to be technical or consultancy services. It is also clarified that consultancy services not of technical nature cannot fall under "included services". In view of this Memorandum of Understanding between two sovereign countries, the consultancy services which are technical in nature alone are to be included as technical and consultancy services for the purpose of fees for included services as per sub clause 4(b) of Article 12 of DTAA between India and USA.
16. In view of the above provisions of the India USA DTAA, we have seen the service agreement executed between the assessee and the service provider. The services provided by the assessee consist of development and determination of short and long term business strategies; overall management and coordination in relation to general policies and strategies per country and per division, maintenance of external relationships to the extent that these services do not comprise 8 to 7218/M/2017 AC Nielsen Corporation shareholder services; human resources services regarding group policies; legal services; insurance services; development, control and maintenance of management information systems; administrative support to group companies, including analysis of management information; development of short and long term IT policies and strategies; management and co-ordination of IT policies between group companies; tax services; financial risk management services, to the extent these services do not comprise Financing Services; support in the area of international staffing, career development and international job rotation; market research, target research and competitor research and stock based compensation. We have noted that while undertaking the above services the assessee has not executed any contracted to make available any technical expertise so as to use those services independently by the licensee. All the services under taken by the assessee are either support services, IT enable services, coordination or tax services as referred above are not such which require transfer of technology, skill to the receipt company.
17. The Hon’ble Karnataka High Court in CIT Vs De Beers India Minerals (P) Ltd. while considering the similar question of law while considering the provisions of India- Netherland Double Tax avoidance Agreement (India- Netherland DTAA), while considering the facts that where a Netherland Company rendered technical services to the assessee, without making available any technical expertise so as to enable assessee use those services independently in future, payment made for such services cannot be termed as ‘fee for technical services’, the relevant part of the decision is extracted below;
Under the Act if the consideration paid for rendering technical services constitutes income by way of fees for technical services, it is taxable. However, Article 12 of the aforesaid India- Netherlands Treaty defines fees for technical services for the purpose of Article 12 which deals with royalties and fees for technical services. The fees for technical services means the 9 to 7218/M/2017 AC Nielsen Corporation payment of any amount to any person in consideration for rendering of any technical services only, if such services make available technical knowledge, expertise, skill, know-how or processes. If the technical knowledge expertise, skill, know how or process is not made available by the service provider, who has rendered technical service for the purpose of Article 12 of DTAA it would not constitute fees for technical services. To that extent the definition of fee for technical services found in the agreement is inconsistent with the definition of fees for technical services provided in Explanation 2 to Clause (vii) of sub Section (1) of Section 9. In view of Section 90 the definition of fees for technical services contained in the agreement overrides the statutory provisions contained in the Act. In fact, the latest agreement between India end Singapore further clarifies this position, where they have explained the meaning of the word 'make available'. According to the aforesaid definition fees for technical service means payments of any kind to any person in consideration for services of technical nature if such services make available technical knowledge, experience, skill, know how or processes, which enables the person acquiring the service to apply technology contained therein. Though this provision is not contained in India Netherlands Treaty, by virtue of Protocol in the agreement, Clause (iv) (2) reads as under:- "If after the signature of this convention under any Convention or Agreement between India and third State which is a member of the OECD India should limit its taxation at source on dividends, interests, royalties, fees for technical services or payments for the use of equipment to a rate lower or a scope more restricted than the rate or scope provided for in this Convention on the said items of income, then as from the date on which the relevant Indian Convention or Agreement enters into force the same rate or scope as provided for in that Convention or Agreement on the said items of income shall also apply under this Convention."
14. Therefore the Clause in Singapore agreement which explicitly makes it clear the meaning of the word 'make available', the said 10 to 7218/M/2017 AC Nielsen Corporation clause has to be applied, and to be read into this agreement also. Therefore, it follows that for attracting the liability to pay tax not only the services should be of technical in nature, but it should be made available to the person receiving the technical services. The technology will be considered 'made available' when the person who received service is enabled to apply the technology. The service provider in order to render technical services uses technical knowledge, experience, skill, know how or processes. To attract the tax liability, that technical knowledge, experience, skill, know how or process which is used by service provider to render technical service should also be made available to the recipient of the services, so that the recipient also acquires technical knowledge, experience, skill, know how or processes so as to render such technical Services. Once all such technology is made available it is open to the recipient of the service to make use of the said technology. The tax is not dependent on the use of the technology by the recipient. The recipient after receiving of technology may use or may not use the technology. It has no bearing on the taxability aspect is concerned. When technical service is provided, that technical service is to be made use of by the recipient of the service in further conduct of his business. Merely because his business is dependent on the technical service which he receives from the service provider, it does not follow that he is making use of the technology which the service provider utilises for rendering technical services. The crux of the matter is after rendering of such technical services by the service provider, whether the recipient is enabled to use the technology which the service provider had used. Therefore, unless the service provider makes available his technical knowledge, experience, skill, know how or process to the recipient of the technical service, in view of the Clauses in the DTAA the liability, to tax is not attracted.
The learned Additional Solicitor General relied on 3 Judgments to point out that was the earlier view. Now there is a departure 11 to 7218/M/2017 AC Nielsen Corporation supporting the department. The first Judgment on which reliance is placed is, the Judgment of the Advance Ruling Authority in the case of Perfetti Van Melle Holding B.V., In re [2012] 204 Taxman 166/[2011] 16 taxmann.com 207 (AAR-New Delhi) where it was held as under:- "The expression 'make available' only means that the recipient of the service should be in a position to derive an enduring benefit and be in a position to utilise the knowledge or know-how in future on his own. "By making available the technical skills or know how, the recipient of the same will get equipped with that knowledge or expertise and be able to make use of it in future, independent of the service provider. So when the expertise in running the industry run by the group is provided to the Indian entity in the group to be applied in running the business, the employees of the Indian entity get equipped, to carry on that business model or service model on their own without reference to the service provider, when the service agreement comes to an end. It is not as if for making available, the recipient must also be conveyed specifically the right to continue the practice put into effect and adopted under the service agreement on its expiry."
16. In the aforesaid case, the applicant holding Company was to provide to its subsidiary Company in India the licence to manufacture and sell products, the licence to use technology, technical marketing and commercial know-how in the manufacture, sales and advertisement and promotion of the products, offer technicians, marketers, salesman, in-house legal counsel and the experienced employees to assist in the activities mentioned above. Under the Service Agreement, specifically the Service recipient require the use of proprietary knowledge and processes belonging to Perfetti Group. Specified services such as Accounting budgeting, sales, marketing, forex management, loans, HR, legal support etc. and specified services are to be provided on continuous basis. Therefore, it was held in the aforesaid case, that the case falls 12 to 7218/M/2017 AC Nielsen Corporation within the purview of Article 12.5(a) of the DTAC on such service which are ancillary and subsidiary to the applicant or enjoyment of right property or information for which the payment prescribed in paragraph 4 of the Article is to be made. Therefore, it is a case of royalty and not fee for technical service. Even otherwise it is clear under the terms of the agreement the technical know-how in the manufacturing, sales, advertisement and promotion of the products is made available. Therefore, the aforesaid finding recorded is legal and cannot be found fault with.
Yet another Judgment relied on is in the case of Shell India Markets (P.) Ltd., In re [2012] 205 Taxman 288 / 18 taxmann.com 46 (AAR-New Delhi) where also the Authority For advance Ruling held relying on findings recorded in Perfetti Marketing case where it was held that "the expression 'make available' only means that the recipient of the service should be in a position to derive an enduring benefit and be in a position to utilise the knowledge or know-how in future on his own." Here, the industrial specific expertise is provided to the Indian entity which is applied in running its business. The employees of the Indian Company get equipped to carry on their business, market or service market on their own without reference to the service provider when the service . Agreement comes to an end. It is a case of making available the technical knowledge. The recipient of the service was conveyed specifically the right to continue the practice put into effect and adopt it under the agreement on its expiry.
18. From the aforesaid statement of law it is clear the test is whether the recipient of the service is equipped to carry on his business without reference to the service provider, if he is able to carry on his business in future without the technical service of the service provider in respect of services rendered then, it would be said that technical knowledge is made available.
19. The 3rd Judgment on which reliance was placed is Areva T & D India Ltd. Again the opinion expressed by the Advance Ruling 13 to 7218/M/2017 AC Nielsen Corporation Authority whereunder under the terms of the agreement the French Company has to provide support service to the Central team in the area of Information Technology to the Applicant and to its subsidiaries in the world. The provision of support services by the French Company would itself make available, the technical knowledge/experience to the Applicant. In that context it was held that the service provider under the IT agreement are in the nature of fees for technical services and taxable under the DTAA as well as under the Act.
In the aforesaid case the business of the applicant being that of executing the projects for transmission and distribution of power on turnkey basis, it is the French Company and other Group Companies which continuously upgrade designs, model and other engineering plans and formulae which are used by the applicant for the purpose of its business. The main objective of setting up of an exclusive platform is not for providing information technology but for enabling the applicant to use data in the form of designs, plan, model and engineering formulae etc., in 2D & 3D form. The character of the payment is clearly royalty as defined in Article 13(3) of DTAA as well as to Explanation 2 to Section 9(1)(vi) of the Act. The agreement clearly establishes that the applicant as to prepare for the installation at the fixed gateway sites for proper installation of equipment by France telecom. It is to act as bailee of the equipment which is under its control and use for its business. The use of equipment is with the usual condition of warranty and the network could be managed by the applicant. The equipment installed is to be integrated into Areva Net Global Network which is managed and controlled by the French Company for equipment installation at gateway sites in Noida and Chennai constitute PE in India as the equipment has been used by the French Company in the course of its business in providing technical data to the group companies.
14 to 7218/M/2017 AC Nielsen Corporation 21. Therefore from the aforesaid Judgments it is not possible to hold that there is a departure by the advance Ruling Authority in respect of its earlier views. It is in this background we have to look at the facts of this case, in order to find out whether the service provider has made available the technical knowledge to the assessee so as to foist the liability of payment of tax.
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, know-how 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 "making 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 consideration would be regarded as "fee for technical/included services" only if the twin tests of rendering 15 to 7218/M/2017 AC Nielsen Corporation services and making technical knowledge available at the same time is satisfied.
The coordinate bench of Ahmedabad Tribunal while considering the provisions of India- Canada DTAA and following the decision of Hon’ble Karnataka High Court in Dee Beers India (P) Ltd (supra) held that rendition of IT support services to assessee by a Canadian company, even if certain equipment were to be used, that by itself did not vest any right in assessee to use equipment and thus, payments made by assessee could not be viewed as payments for 'use or right to use' any industrial, commercial or scientific equipment. The relevant part of the order is extracted below; 15. We find that so far as taxability under Article 12, i.e. with respect to 'Royalties and fees for included services' is concerned, we find that Article 12(4) provides that, "The term "fees for technical included services" as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services : (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received ; or (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein". In order to invoke article 12(4)(a) it is necessary that such services should "make available" technical knowledge, experience, skill, know-how, or processes or consist of the development and transfer of a technical plan or technical design The services provided by BT Canada were simply management support or consultancy services which did not involve any transfer of technology. It is not even the case of the Assessing Officer that the services were such that the recipient of service was enabled to perform these services on its own without any further recourse to the service provider. It is in this context that we have to examine the scope of expression 'make available'.
As for the connotations of make available clause in the treaty, this issue is no longer res integra. There are at least two non- jurisdictional High Court decisions, namely Hon'ble Delhi High Court in the case of DIT v. Guy Carpenter & Co Ltd [2012] 346 ITR 504/207 Taxman 121/20 taxmann.com 807 and Hon'ble 16 to 7218/M/2017 AC Nielsen Corporation Karnataka High Court in the case of CIT v. De Beers India Minerals (P.) Ltd [2012] 346 ITR 467/208 Taxman 406/21 taxmann.com 214 in favour of the assessee, and there is no contrary decision by Hon'ble jurisdictional High Court or by Hon'ble Supreme Court. In De Beers case (supra), Their Lordships posed the question, as to "what is meaning of make available", to themselves, and proceeded to deal with it as follows: 'The technical or consultancy service rendered should be of such a nature that it "makes available" to the recipient technical knowledge, know-how 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 "making 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, skill, 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 consideration would be regarded as "fee for technical/included services" only if the twin tests of rendering services and making technical knowledge available at the same time is satisfied.
Further, the coordinate bench of Pune Tribunal in Sandvik Pty. Ltd Vs DCIT (supra) while considering the provisions of India–Australia DTAA held that the assessee had only provided back-up services and IT support services for solving IT related problems to its Indian subsidiary and services were not made available, payment received for 17 to 7218/M/2017 AC Nielsen Corporation such services could not be taxed in India in view of article 12(3)(g) of Indo-Australia Treaty. The relevant part of the decision is reproduced below: 13. We are concerned with para No. 3 of Article 12, which defines the term Royalty. Under the IT Act, the term royalty and expression FTS are classified as two different connotations, i.e. 9(1)(vi) and 9(1)(vii). So far as Article 12 is concerned, FTS is included in the term "royalty" for the purpose of deciding in which contracting state the income from the same is to be taxed. Clause (g) in Article 12(3) goes to the roots of the issue. Main thrust of the argument of the Ld. Counsel is that it is not only sufficient to render the services but the same should be made available to the recipient and this particular important aspect is missed by the DRP/TPO. We find that the expression "making available" is very much important to decide in which contracting state the amount received for rendering the services relating to the technical know-how is to be taxed. The expression "make available" is used in the context of supplying or transferring technical knowledge or technology to another. It is different than the mere obligation of the person rendering the services of that persons own technical knowledge or technology in performance of the services. The technology will be considered as made available when the person receiving the services is able to apply the technology by himself.
The expression 'make available' has come for consideration before the Hon'ble High Court of Karnataka in the case of De Beers India Minerals (P.) Ltd. (supra). In the said case, the Treaty between India and Netherlands was for the consideration of their Lordships. The assessee in that appeal was a providing company engaged in the business of prospecting and mining for diamonds and other minerals. They have been granted licences (Reconnaissance Permits) by the State Government of Karnataka, Andhra Pradesh and Chhattisgarh. During the early stage, various techniques were employed for the purpose of carrying out geophysical survey, the assessee entered into 18 to 7218/M/2017 AC Nielsen Corporation agreement with M/s.Fugro Elbocon B.V. Netherlands, who had a team of experts specialised in air borne geophysical services for clients. For the technical services rendered by them the said assessee had paid consideration. The Assessing Officer applied Article 12 of the Indo-Netherlands Treaty and held that the same was taxable in the hands of the Netherlands Company. As the wordings of Article 12 in the Indo-Netherlands Treaty are analogous to Article 12 of the India Australia Treaty, as expression 'make available' is also used while determining fiscal jurisdiction of the contracting state, the Hon'ble High Court explained the meaning of the expression 'make available' which was appearing in the Indo-Netherlands Treaty.
20. In view of the above factual and legal discussions, we hold that the assessing officer erred in taxing the service agreement receipt as ‘fee for included services’ as per Article 12(4) of India USA DTAA for such services as mentioned in para 4 (supra), in absence of clause in the service agreement dated 09.01.2009, that the recipient would be able to perform these services of its own without any further assistance of the assessee.
The ratio of decision of Cochin Tribunal in M/s US Technology Resources Pvt. Ltd. vs. ACIT (supra) relied by ld. DR for the revenue is not helpful to the revenue. In the said case the assessee rendering the services in the field of management decision making. Further, in the said case it was clearly held the expertise and technology was made available by USA company was a technical services within meaning of Article 12(4)(b) of India-USA DTAA.
In the result the Ground No. 2 of the appeal is allowed.
Considering the decision of coordinate bench (authored by same combination) on similar set of facts and on similar grounds of appeal for taxing the similar receipt for services, the ground of appeal no. 1&2 of the appeal is allowed. grounds of appeal is consequential, thus, the assessing officer is directed to recompute the interest as per law.
In the result the appeal of the assessee is allowed. &7218/Mum/2017, for AY 2005-06 & 2000-07
9. As we have noted earlier, the assessee has raised identical grounds of appeal for these years as well, therefore considering our finding in appeal for AY 2004-05, these appeals are also allowed with similar observation.
In the result, appeals of the assessee for AY 2005-06 & 200607 are also allowed.
Order pronounced in the open court on 22/07/2019.