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2022 (2) TMI 514 - AT - Income TaxIncome accrued in India - Receipts on sale of hardware with embedded software - royalty receipts - DTAA between India and UK - assessee is a non-resident foreign company incorporated in United Kingdom - AR submitted that assessee granted exclusive non-transferrable license to customers in India to enable them to use the software for provision of DTH services to Indian subscribers - HELD THAT:- As decided in own case [2021 (11) TMI 1023 - ITAT BANGALORE] that pure reimbursement does not give rise to any income and the decisions cited by the learned AR in this regard lay down the above principle. We find that the revenue authorities have not firstly held that as to whether there was one-toone tally of sums spent by the Assessee that was reimbursed by NDS Pay Tv. Once this factual finding is rendered then there has been no payment for any services whatsoever. The question is can one infer that the sums reimbursed were for services rendered by Assessee when there is one to one tally. In our view it cannot be said so. As we have already mentioned the AO has proceeded to draw inferences on surmises and conjectures. Firstly there is no evidence to show that services were rendered which can be termed as FTS. Under the DTAA FTS can be taxed only when it makes available technical knowledge to the person making payment. On the application of “make available” clause of the DTAA, there is no finding whatsoever as to what was the technical service made available to NDS Pay TV. We, therefore, deem it fit to set aside this issue and remand the same for consideration by the AO in the light of the observations made above (in particular with regard to actual tally of expenses incurred and reimbursed by NDS Pay Tv to Assessee), in accordance with law, after affording assessee opportunity of being heard. The facts are identical and the arguments advanced by the Ld.AR as well as the Standing Counsel for revenue are similar with that raised in the preceding assessment years. It is noted that the Ld.AO proceeded on identical basis for the relevant assessment year, we are of the opinion that the entire addition in respect of international transaction needs to be looked into afresh having regards the principles laid down by various decisions cited and referred to by coordinate bench of this Tribunal hereinabove as well as the articles under the DTAA between India and UK. Levy of interest u/s. 234B on the proposed addition under international taxation - HELD THAT:- As relying in assessee own case we direct that there shall be no levy of interest u/s. 234B of the Act under the present facts of the case. Accordingly, this ground raised by assessee stands allowed.
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