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2017 (2) TMI 633 - AT - Income TaxBenefits of Sec. 115A - Payments made to Standard Chartered Bank (SCB) India - payments for “Royalty” or “Fees for Technical Services (FTS)- Held that:- Since the assessee-company is incorporated in Hong Kong and is providing services/facilities for processing data to SCB from Hong Kong, therefore, the payment made by SCB India to assessee has to be seen from the perspective of domestic law, i.e. Income-tax Act and not under any treaty. There is neither transfer of any of right in respect of any patent, invention, model, design, secret formula or process or trademark or any similar property by the assessee to SCB, nor there is any imparting of any information or use of any of similar nature of things. Here, the entire equipment and technology which are used for processing the data is solely for performing the activity of assessee for itself while rendering data processing services to SCB. There is absolutely no transfer of any technology, information, knowhow or any of the terms used in Explanation 2 or any kind of providing of technology in the form of data centre, infrastructure, connectivity and application technology by the assessee to SCB for SCB’s banking operations. Thus, we are of the opinion that the payment made by SCB to assessee-company does not fall within the realm of “royalty” and hence cannot be taxed in India as royalty u/s 9(1)(vi) of the Act. The payment made by SCB to assessee-company does not fall within the realm of ‘fees for technical services’ as contained in Sec. 9(1)(vii), albeit the assessee has only provided a standard facility for data processing without any human intervention. Accordingly, we hold that the said payment is not taxable in India as ‘fees for technical services’ in terms of Sec. 9(1)(vii) of the Act. Thus, the issue raised in ground no. 1.1 is decided in favour of the assessee. With regard to rate of tax u/s 115A however this issue will become purely academic because we have already held that the amount of payment received by assessee from SCB is not taxable in India. Credit of tax paid we direct the Assessing Officer to look into this issue and allow credit of tax paid as per the directions given by Tribunal in the stay petition. Chargeability of interest u/s 234B - It is admitted that this issue is covered in favour of assessee in view of the decision in the case of NGC Network Asia LLC, (2009 (1) TMI 174 - BOMBAY HIGH COURT). Accordingly, respectfully following the same we direct to delete the interest u/s 234B.
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