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2015 (6) TMI 806 - AT - Income TaxStandby maintenance revenues earned under the Construction and Maintenance Agreement (C&MA) from VSNL - whether taxable in India as ‘Fees for Technical Services’ (‘FTS’) under section 9(1)(vii) - Held that:- It is not in dispute that the standby charges is a fixed annual charge, which is payable not for providing or rendering services albeit for arranging standby maintenance arrangement, which is required for a situation whenever some repair work in under-sea cable or terrestrial cable is actually required to be performed or rendered. It is a facility or infrastructure maintained for ready to use for rendering the technical services or for repairing services, if required. There is no actual rendering of the services qua the standby maintenance charges.Here, it is not the case of AO or CIT(A) that standby maintenance charges is on account of actual repair or maintenance carried out by the assessee. Hence, following the earlier years’ precedence, we hold that the receipt on account of standby maintenance charges is not chargeable as ‘fees for technical services’ within the scope of section 9(1)(vii). - Decided in favour of assessee. Income earned from Restoration activity - liable for tax in India either as ‘Fees for Technical Services’ (‘FTS’) under section 9(1)(vii) or as business income under section 9(1)(i) - Held that:- From the perusal of the restoration agreement and various clauses, it cannot be inferred that there is any actual rendering of technical services by the assessee. Nothing is suggestive of the fact that under the restoration agreement some kind of technical skill, technical services are being provided, except for the kinds of restorations which can be undertaken and terms thereof for the connectivity and payment. Thus on these facts, we hold that revenue received from restoration activities is not taxable as FTS u/s 9(1)(vii). The assessee has provided the chart of the segments on which the restoration activities have been undertaken by way connection to the cable landing station in the territorial waters in India, which was from Fujirah to Mumbai, Miura to Mumbai and Mumbai to Singapore. The assessee has also filed a statement showing the details of restoration charges over the years giving the details of segments on which the restoration has been provided; length of the segment, length of the cable in territorial waters of India and apportionment of revenue to India. In principle, we uphold the method of attribution of revenue as given in the said statement, however the AO is directed to determine the income of the assessee which is to be taxed in India after apportioning the revenue on the basis of length of the cable in the territorial waters in India on the segments on which restoration have been provided. The working given in chart submitted by the assessee shall be verified by the AO, so as to determine the correct business income which is to be taxed in India.- Decided partly in favour of assessee. Liability to pay interest under section 234B - Held that:- As admitted by both the parties, this issue is similar to the issue involved in the appeal for assessment year 1998-99, 1999- 2000 & 2000-01, wherein, the Tribunal after following the decision of DIT vs NGC Network Asia LLc reported in [2009 (1) TMI 174 - BOMBAY HIGH COURT] held that there was no liability to pay interest u/s 234B. - Decided in favour of assessee. Liability to pay interest under section 234D - Held that:- coming to the issue of interest under section 234D, it has been admitted by the ld. Counsel that the levy of interest u/s 234D would be applicable in these years also in view of the decision of Hon’ble Bombay High Court in CIT vs. Indian Oil Corporation Ltd.(2012 (9) TMI 517 - BOMBAY HIGH COURT). - Decided against the assessee.
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