TMI Blog2010 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... CAB will, of course, be benefited by the accreditation certificate issued by the applicant but that fact has hardly any bearing on the point whether "make available" criterion has been satisfied or not. Viewed from any angle, it cannot be said that the applicant is imparting any knowledge or skills to the CABs which are utilized by the CAB in conducting its business. - The activities of the application are not falling under FTS - Since there is no PE in India, such profits can not be subject to tax in India - No withholding tax in India - 838/2009 - - - Dated:- 6-8-2010 - Mr. Justice. P.V. Reddi (Chairman) and Mr. J. Khosla and Mr. V.K. Shridhar(Members), JJ. For the applicant - Mr.A.J. Majumdar, Mr. Satish Aggarwal, Mr. Nitin Garg, Mr. Atul Awasthi, and Mr Anshul Sachar. Present for the Department:- RULING [ P.V. Reddi J. - Hon'ble Chairman] 1. In the application for advance ruling filed under section 245Q of the Income-tax Act, 1961 (for short 'the Act'), the following facts are stated: 1.1. The applicant, Joint Accreditation System of Australia and New Zealand is a not for profit, self funding organization established under the Treaty between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the individual non- conformities found during the assessment stage; The effectiveness of the system in meeting the requirements of the accreditation criteria; and Reliance that can be placed on the internal assessment function with the CAB. 1.5. If the accreditation is approved, a certificate of accreditation is issued to the CAB; otherwise the reasons for rejection are communicated. The Accreditation vouchsafes the independence of a CAB in performing the certification and such accreditation further assists the CAB in the fields of certification and inspection. Once accreditation is granted to CAB, the applicant issues a certificate which is valid for four years and on expiry of four years, the re-assessment takes place. Post accreditation, regular surveillance visits are carried out by the applicant's auditors to ensure that CAB maintains and operates its procedures in accordance with the requirements of the accreditation criteria. 1.6. The accredited CABs provide certification and inspection services to the concerned organizations. Common schemes that CABs certify are - quality management systems and environmental management systems. 1.7. In consideration of the accredit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant? 3. Question nos. 1, 3 and 5 are pressed before us. Regarding question no. 1, it is the contention of the applicant that no service is involved in the activities of the applicant and the receipts from the Indian CAB cannot be categorized as 'fees for technical services' within the meaning of Section 9(1)(vii) of the Act. It is further contended that the applicant does not in any case render any technical or consultancy services which make available technical knowledge, experience, skills, know- how or process within the meaning of clause (g) of Article 12.3 of the Tax Treaty between India and Australia. In the absence of permanent establishment in India or any business connection in India, it is contended that the applicant is not liable to pay tax in India. 4. Before proceeding further, it is relevant to refer to certain definitions and recitals in the Agreement entered between Australia and New Zealand concerning the establishment of the Joint Accreditation System (the applicant). 4.1. In the preamble it is recited that the parties (i.e. Australia and New Zealand) recognized the fact "that their participation in a joint accreditation system will enhance trade be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration for: (a) the use of, or the right to use any copyright, patent, design or model, plan, secret formula or process, trade mark or other like property or right; (b) the use of, or the right to use, any industrial, commercial or scientific equipment; (c) the supply of scientific, technical, industrial or commercial nowledge or information; (d) the rendering of any technical or consultancy services (including those of technical or other personnel) which are ancillary and subsidiary to the application or enjoyment of any such property or right as is mentioned in sub-paragraph (a), or any such equipment as is mentioned in sub-paragraph (b) or any such knowledge or information as is mentioned in sub-paragraph (c); (e) the use of, or the right to use; (i) motion picture films; (i) films or video tapes for use in connection with television; or (ii) tapes for use in connection with radio broadcasting; (f) total partial forbearance in respect of the use or supply of any property or right referred to in sub-paragraphs (a) to (e); (g) the rendering of any services (including those of technical or other or other personnel), which make available technical knowledge, exper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision in the DTAA would prevail over the provision in the domestic enactment. Therefore, it has to be seen whether the applicant can be said to have rendered technical service of the description falling under clause (g) of Article 12.3 of the DTAA by issuing accreditation certificate to CAB. If the answer is in negative, the liability to tax can also not be fastened on the applicant in the absence of a permanent establishment or business connection in India. Therefore, the only aspect to be considered is whether applicant can be said to have undertaken any activity of the nature described in clause (g) of Article 12.3. There is no other clause in article 12.3 which can possibly be invoked by the Revenue. 7. On a deep consideration, we are of the view that the contention of the applicant has to be upheld and clause (g) of the Article 12.3 cannot be applied to the activity undertaken by the applicant. The scope and meaning of the Phrase "making available technical knowledge, experience, skill, etc. has been explained in more than one rulings of this Authority. We would like to quote the relevant passages in the case of Anapharm reported in 305 ITR 394. "It is, thus fairly cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when a similar expression found in another Treaty is interpreted and explained in a particular manner consistent with one shade of meaning that can be attributed to it, there is no reason why that interpretation shall be eschewed. In our view, the explanatory memorandum becomes a valuable aid in interpreting the phrase "make available". It reflects the Government of India's viewpoint on the true connotation of the expression. It stands on a higher pedestal than the principle of contemporania expositio applied in several cases. Hence, the interpretation given in the MOU can be usefully adopted while dealing with a provision similarly worded." 8. In the decision of Diamond Services International Ltd. Vs UOI (304 ITR 201), the High Court of Bombay held that the job of grading the diamonds in the laboratory and furnishing grading certificate did not amount to transferring any (technical) skill or knowledge to the customers. Nor did it amount to transfer of any industrial or commercial experience of the Company which issued the certificates. 9. Having regard to the view that has been consistently taken in various rulings, we accept in principle the contention of the applicant o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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