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Income Tax Appellate Tribunal, BANGALORE BENCH ‘C’, BANGALORE
Before: SHRI S.K.YADAV & SHRI A. K. GARODIA
This is assessee’s appeal directed against the order of ld. CIT (A)- 12, Bangalore dated 19-12-2014 for assessment year 2011-12.
The assessee has raised the following grounds:
“1. The income in consideration cannot be categorized as fee for included services under the India- US Double Taxation Avoidance Agreement (The DTAA).
2 IT(IT)A No.183/(Bang)/2015
1.1. That on the facts and in the circumstances of the case, the CIT(A) erred in treating the service receipts of INR24,117,667 s income accrued or arised in India under fee for technical services Further, the ld. CIT(A) erred in treating the mentioned service receipts as fee for included services under the DTAA, irrespective of the fact that the appellant did not make available any technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design as per Article-12(4) of the DTAA”.
It was submitted by the ld.AR of the assessee that in the present case, the dispute is this as to whether the assessee has made available the technical know-how to its customers in India because as
per Article-12(4) of the DTAA between India and US, if the technology is not made available then this cannot be considered as income in the hands of the entity who have received consideration for supplying the technical know-how or technical services. In support of this contention, he placed reliance on a judgment of the Hon’ble Karnataka High Court rendered in the case of CIT Vs De Beers India Minerals Pvt.Ltd., 346 ITR 467(Kar.) He also placed reliance on the Tribunal order rendered in the case of ABB Inc. Vs DDIT International Taxation, Circle-1(1), Bangalore.
Regarding this allegation of the AO and the ld. CIT(A) that he required details were not made available, he submitted that all the details were made available before both the authorities and in support of his contention, he has drawn our attention to letter dated 24-02-2014
3 IT(IT)A No.183/(Bang)/2015 submitted to the AO along with the Annexure and details mentioned therein copy of which is available on pages 1 to 16 of the paper book. In particular, our attention was drawn to page-4 of the paper book which is an invoice raised by the assessee company on Gujarat Guardian Limited, as per which the invoice is raised for services rendered by foreign technicians for carrying out ceramic welding repairs in the furnace of the customer and for Pot floor pouring. He also submitted that all other invoices are also for similar services in connection with ceramic welding repairs of the furnace of various customers and no technical know-how was made available by the assessee company to any of the customers and therefore, as per this Article-12(4) of India US DTAA, the receipt of the assessee company on account of service charges is not liable to tax in India. He further submitted that copy of one more letter submitted to the AO on 06-03-2014 is available on pages 17 – 30 of the paper book which includes job assignment chart for Andre Weary for various parties and from the same, it cannot be said that any technical know-how was made available by the assessee company to any of its customers.
As against this, the ld. DR of the revenue supported the order of the ld.CIT(A) and in particular our attention was drawn to para-6 of the order of the ld. CIT(A) as available on pages 37 to 40 of his order.
We have considered the rival submissions. We find that it is noted by the ld. CIT(A) in para-6 of his order that the assesee could not provide exhaustive details before the AO with respect to determining the 4 IT(IT)A No.183/(Bang)/2015 nature of services rendered to the utilizers in India. Before us also the ld AR of the assessee has submitted some invoices and there is a service order available on page-11 of the paper book which says that welding has to be done as per scope of work as agreed as per the quotation of the assessee. The Bench asked the ld. AR of the assessee to produce copy of quotation given by the assessee to its customers to find out the scope of work. In reply, it was submitted by the ld. AR of the assessee that the same is not readily available. Under these facts, we feel it proper that the matter should go back to the file of the ld. CIT(A) for a fresh decision because complete documents are not made available before us also and this is a finding of the ld. CIT(A) that details were not made available before him or before the AO.
Regarding the judgment cited by the ld.AR of the assessee, we would like to observe that if on fact, it is found that technical know-how is not made available to its customers in India by the present assessee then the technical charges received by the assessee cannot be taxed in India but this factual aspect has to be examined as to whether the technical know-how was made available by the assessee to its customers in India. Since required materials including Quotation etc. are not available to examine and decide the factual aspect, we set aside the order of the ld.CIT(A) and restore the matter back to the file of the AO for fresh decision in the light of the above discussion after providing adequate opportunity of being heard to the assessee. The assessee is directed to bring all the details and evidences before the A. O. so that he
5 IT(IT)A No.183/(Bang)/2015 can examine and decide the factual aspect as to whether the technical know-how was made available by the assessee to its customers in India or not. After examining the factual aspect, he should consider the applicability of various judgments cited before us or which may be cited before him and then pass necessary orders as per law.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open court on the date mentioned on the caption page.