BOMBARDIER TRANSPORTATION SWEDEN AB,NEW DELHI vs. DCIT, CIRCLE- 1(1)(2), INTERNATIONAL TAXATION, NEW DELHI

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ITA 8247/DEL/2018Status: DisposedITAT Delhi27 September 2021AY 2015-164 pages
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What did the Tribunal hold?

The Tribunal held that BTIN was not a fixed place PE as the assessee had no place of disposal in India. It also held that the managerial services did not qualify as FTS as they did not satisfy the 'Make Available' clause.

What were the facts?

The assessee appealed against the AO's decision to treat BTIN as a fixed place Permanent Establishment (PE). The revenue appealed against the non-treatment of managerial services as 'Fee for Technical Services' (FTS). Both issues were decided based on previous ITAT rulings in the assessee's own case.

What were the issues?

Whether BTIN constituted a fixed place Permanent Establishment and whether managerial services rendered qualified as Fee for Technical Services.

Which sections of the Income-tax Act were involved?

Article 5(1) of Indo-Sweden DTAA

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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI

Before: Sh. Kul BharatDr. B. R. R. Kumar

Hearing: 27.09.2021Pronounced: 27.09.2021

Heard together (3 matters)

ITA No. 8246/Del/2018
ITA No. 8247/Del/2018
ITA No. 8338/Del/2018

Read from the judgment's own cause title. This page is filed under one of them.

The present appeals have been filed by the assessee against the orders of ld. CIT(A)-42, New Delhi dated 22.10.2018 and the appeal of the revenue against the order of ld. CIT(A)- 42, New Delhi dated 22.10.2018.

, 8247 & 8338/Del/2018 2 Bombardier Transportation Sweden AB 2. The appeal of the assessee for the A.Ys. 2013-14 & 2015-16 is against upholding the action of the AO in treating the BTIN as fixed place PE of the assessee under Article 5(1) of the Indo-Sweden DTAA.

3.

At the outset, it was brought to the notice by the ld. AR that this issue is squarely covered by the order of the Co-ordinate Bench of ITAT in the assessee’s own case in for A.Y. 2011-12. The ld. DR fairly submitted that the matter indeed has been adjudicated by the ITAT vide order dated 29.10.2020.

4.

For the sake of ready reference, the operative part of the above said order is reproduced as under:

“40. In our considered opinion, the entire findings of the DRP are based on erroneous appreciation of wrong facts and on such erroneous appreciation of wrong facts, the DRP held that BTIN is the PE of the appellant in India without appreciating the true facts that the appellant has no place of disposal in India in the office of BTIN from where the appellant could have conducted its business in India..............

44.

Considering the facts in totality, and also the fact that the TPO has examined the international transactions and has accepted the same to be at ALP, we do not find any merit the additions made by the DRP. We accordingly, direct the Assessing Officer to delete the addition of income attributable to PE amounting to Rs. ......”

5.

Since, there is no material change in the facts of the case and the legal proposition of the issue, we hereby allow the appeal of the assessee on this ground. , 8247 & 8338/Del/2018 3 Bombardier Transportation Sweden AB 6. The appeal of the revenue for the A.Y. 2013-14 is against non- treatment of the managerial services as “Fee for Technical Services”. The matter is stands covered by the order of the ITAT for the A.Y. 2011-12.

7.

For the sake of ready reference, the operative part of the above said order is reproduced as under:

“23. On this basis, the CITA in A.Y 2010–11, has categorically observed that the said intermediary services rendered by the appellant to BTIN does not satisfy the ‘Make Available’ clause and does not amount to FTS.

24.

In our considered opinion, the technical or consultancy services rendered 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. 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.

25.

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. In our considered view, payment of 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. For this, we derive support from the decision of the Hon'ble Karnataka High Court in the case of De Beers India Minerals Private Limited 346 ITR 467.

26.

In consideration of totality of facts, we are of the opinion that the intermediary services rendered by the appellant do not make available any technical knowledge, skill etc to BTIN and BTIN is not a equipped to apply technology contained in services rendered by the appellant. Therefore, the 8247 & 8338/Del/2018 4 Bombardier Transportation Sweden AB intermediary services provided by the appellant to BTIN do not tantamount to FTS and accordingly, shall not be taxable in India.”

8.

Since, there is no material change in the facts of the case and the legal proposition of the issue, we hereby dismiss the appeal of the revenue on this ground.

9.

In the result, both the appeals of the assessee are allowed and the appeal of the revenue is dismissed.

Order Pronounced in the Open Court on 27/09/2021.

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